shopping Receipts?

Question

I think my wife is crazy. All 06' she has been saving almost every Receipts from shopping( best buy, walmart, 7-11, Gas, etc.). she claims that the taxes that she pays on the Receipts(@$700) can be claimed on the 06' federal income tax. She she wrong or do i owe her a night out?

thanks

Answer 1

Both the answers are out of date. The sales tax deduction got extended in December. You can either save all receipts or you can use the table amounts. go to irs.gov and download Publication 600. I imagine most tax software will ask you pertinent questions to establish if you can claim. You must be able to itemize to claim the deduction.

There are two main reasons for claiming the sales tax deduction:
You are in a state without income tax
You are retired and live in a state which taxes little or no retirement income (here in NC, social security, NC state and federal pensions are tax-free for instance)

The sales tax deduction is an alternative to the state income tax deduction, not in addition to it. It is unusual to be able to claim. Sometimes you can claim if you buy an expensive car, but that usually requires a high income (and a correspondingly high state tax bill) to be able to deduct.

Now, do you owe her a night out? Well she's right, the receipts CAN be claimed on your return but most people do not benefit from it. Your call!

Answer 2

The first two answers are totally wrong. According to the IRS, If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount.

If you didn’t save all your receipts, you can still choose to claim state and local sales taxes. You could fill out the worksheet and use the optional general sales tax tables in Publication 600, State and Local General Sales Taxes (for 2006 tax returns) or 2005 Instructions for Schedules A & B (Form 1040) (for 2005 tax returns) – but why not take the easy route and use the Sales Tax Deduction Calculator!

Answer 3

You probably owe her a night out. If you itemize, you have a choice of deducting the total of your state and local taxes, or sales taxes, whichever is more. There's a table for each state by income and family size with a sales tax amount you can have automatically, but if you can prove that you spent more, then you can deduct what you actually spent.

If you live in a state with a state income tax, it's very likely that your state income tax would be more than your sales tax, so you would not end up using the sales tax. And if you take the standard deduction, then no, you don't show either on your return.

So yes, she's right, the sales tax can be deductible. Whether you will be able to end up using it depends on your personal circumstances though.

Answer 4

Skip seems to have it covered. Years ago, you used to be able to take a standard deduction for sales tax, or track your receipts to take a larger deduction if you paid more in sales tax than the deduction covered. I'm not sure when this was phased out.

Answer 5

She's 100% wrong. INCOME taxes are deductable. PROPERTY taxes, in some cases are deductable. Taxes you pay on items at a store are not. Oh...and do not let her do your taxes; you'll be facing a nice little audit. Your wife is a nut. :-D

Answer 6

i don't think you can claim sales tax on your income tax returns... you can claim business expenses on your return if you itemize.

I would check with a tax advisor or www.irs.gov to be sure.