Sales tax deduction?

Question

I purchased a truck for my business and paid 1400.00 in sales tax. I use the truck 100% for business. What I was wondering is can I take the sales tax off of my income tax or is it included in the depreciation. Also I didnt keep a record of mileage for the year. Does that make any differance.

Answer 1

All expenses for buying the truck, including the sales tax. are added to the basis and depreciated.

Answer 2

Here is the problem. The sales tax deduction is only for personal sales tax that you paid, and it is claimed on Schedule A. If you paid sales tax on a business asset that is used in your business, the depreciation rules state that you do not currently deduct the sales tax you paid, but rather you include it into the cost basis for purposes of depreciation. You cannot "double dip" and get both the sales tax deduction and depreciation on the sale tax.

Answer 3

"Also I didnt keep a record of mileage for the year"

Ouch. That means you can only take the car deductions if you can show that the car really WAS exculsively business use, (and that you definitely have another car, and the truck was never used for personal errands or trips). And also, you can only use your actual expenses. Hope you kept records.

The easier way is to take the cents-per-mile deduction, but that's only available itf you kept your milage records.

The sales tax is deductible. I would ask your tax professional if it's inculded in the purchase amount for depreciation, or if it's deductible as a car expense by itself for that year.