Sales tax deductions?

Question

I heard that if you save all of your reciepts throughout the year, and the sales tax is $1500 or more, you can get a deduction on your tax return. Is this true, and are there any restrictions on what you purchase?

Answer 1

Interesting question. I had to go look it up.

Looks like it's true - but with a catch. (Isn't there always??)

If you itemize (Schedule A of the 1040) - you can deduct EITHER your state and local income taxes...OR sales tax you paid. But not both.

(I can't imagine anyone actually paying more in sales tax than state and local income tax...unless they sepnt more than their own yearly income on "stuff" that year)

From 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."

Answer 2

Sales tax can be deducted without saving reciepts - you will be useing the standard deduction that the irs determines. If you save your receipts and add them up you can use that number instead, whichever is higher is better. You can deduct all sales tax you paid no matter what you bought.

Answer 3

Yes it is true.

You can either save all of your receipts or take the standard deduction, and I think that is calculated using a table.

I think there are restrictions, but I used Turbo Tax and bought the $29.95 package and it guided me through all of that.

Whoever gave me a thumbs down, you suck. I just did my taxes and I am answering the question based on my experience, so bite me.

Answer 4

Just use any of the tax software companies listed here with promotional offers http://www.greatcoupons-online.com/online-coupons/4249.html and they shall guide you whether a standard deduction is better or itemizing is better.