filing income tax is coming next year and should i keep all the receipts of what i bought and file them too???

Question

is it also really true that i could actually keep all the receipts of what i buy since they're all taking taxes like 8.8% every item and use them for my income tax return???

Answer 1

If you live in a state that doesn't charge state income tax (like Texas or I believe there are 7 other states as well), you are allowed to deduct sales tax instead. In which case it would be good to hold on to the receipts for any big tickets items ... car, furniture, TVs, appliances, etc. But I wouldn't waste my time holding on to a ton of receipts that only have 10 cents or a buck of taxes ... that's a lot of paper to sort through just for a few pennies back.

If you live in a state the charges income tax AND you itemize on your taxes you're most likely better off just taking the income tax deductions rather than the sales tax ... Unless ... you spent a TON of money on goods and services that year.

Answer 2

For the last few years, if you itemize you have had the choice of deducting state and local taxes, or sales tax. People who live in places that don't have state income tax, or people who didn't owe any, often came out better by deducting sales tax. I haven't heard that's been extended to this year, but Congress still hasn't finalized things, so it might be. There is a table you can use that depends on income, state and family size that will give you a flat amount you can use - if you add up all of your receipts and it comes to a higher total, you can use that instead. If you bought a car, plane, or boat during the year, you can add the sales tax on those purchases to the amount in the table if you use the table. If you are thinking about doing this, I'd suggest that you add up all the sales tax before you go to the tax preparer - if they have to do it, your costs will go up a lot and you'll be there next to forever. IF congress extends this, and IF you itemize, and IF your sales tax deduction is more than your state and local taxes, then you'd save at most the amount of the deduction times your tax bracket. So if you had $1200 in sales tax paid (note this is the TAX, not the total on the receipt that includes the cost of the item) and you're in a 15% bracket, your tax savings could be as much as $180. You aren't likely to save much by adding up all your receipts though, than if you just used the table.

Answer 3

Sales tax on items is only deductible if you itemize, and even then, there's a table for each state giving an amount you can deduct, which is probably easier than adding up receipts of every purchase all year. You'd only take it if it's greater than your total state and local taxes. This is rare in states with state income tax, so depends on where you live. The sales tax deduction was supposed to expire this year but was just extended last week, and some of the wording isn't yet clear, but it sounds like it was only extended for people living in a state without a state income tax.

Answer 4

If you itemize, you have the option to either deduct your sales taxes or your state income taxes on your federal tax return. You cannot deduct both.

Answer 5

If you are running a business and these items are directly related to the operation of your business, then you can do that. But, if you are just the average wage earner and want to claim a deduction for the 56in plasma tv and your new car etc, don't waste your time. Unless you just want to be audited. The Independant Ripoff Service, (IRS) makes it a point to check people with excessive amounts of deductions every year. It's all about what you can deduct want what you can't.

Answer 6

For all practical purposes, sales taxes are not deductible. It sounds like you're not going to be taking itemized deductions, in any event.

Answer 7

depends on what you bought. some is tax deductible but a lot isn't. Basically if its work related and you are not compnsated for it yes you can claim it. Otherwise no.