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Sat 8 Jan, 2005 08:23 pm
This is probably a dumb question, but if you keep every receipt over the year and keep track of every penny that you've spent on sales tax, can you write it off from your taxes owed at the end of the year if you've already paid an income tax?
Or, do you just have to live with being double taxed?
It's not deductible for income tax on a personal return. Business, yes.
Long time, no see, roverroad.
Oh, maybe I should register for a business license for my personal affairs
Thanks, I log in a lot, just haven't posted much lately.
Rov
Effective this year (2004 1040 personal income tax), if you itemize deductions, you have the option of deducting state and local income tax or state and local sales tax. You can deduct either actual sales tax or use the table in Pub. 600.
Upon rereading your question, I am confused. Any federal income taxes that you have already paid are deducted from the amount that you must send to the IRS, and if you end with a negative figure, the IRS will send a refund.
Flyboy, I have a full time job and my income taxes are deducted by my employer, therefore the money I spend has already been taxed once. That's why I was wondering if you can deduct the taxes that you've paid on sales tax at the end of the year since it is a double tax.
Thanks,
Rov
Roverroad, there's no double taxation involved here. The money that your employer has withheld (and forwarded to the IRS) is credited as part of your payment. If the amount withheld exceeds what you compute as being owed, you will receive a refund from the IRS. If not, you only pay the difference. It sounds as though you are a first time income tax payer. If so, this will probably become clear to you when you see your Income tax form.
You don't understand the question. Thanks anyway, Roger already told me what I need to know.
I did a quick search on IRS Pub 600. Flyboy is correct, and roger is a year out of date. Sorry for the misinformation.
Quote:IRS Issues Optional Sales Tax Tables
IR-2004-153, Dec. 17, 2004
WASHINGTON ?- The Internal Revenue Service has made available on its Web site Publication 600, Optional State Sales Tax Tables, which taxpayers may use for their 2004 returns. The IRS also will send Pub. 600 to all taxpayers who get a Form 1040 tax package.
The tax law authorizing this optional deduction for state and local sales tax instead of state and local income tax was enacted too late in the year to include the tables in the tax instruction books.
The American Jobs Creation Act of 2004 authorized the sales tax deduction as an option for those who itemize deductions, letting them choose between deductions for state and local income or sales taxes. Taxpayers will indicate by a checkbox on line 5 of Schedule A which type of tax they're claiming. The law provides this choice for Tax Years 2004 and 2005 only.
"Taxpayers should check these tables to see if they're entitled to a larger sales tax deduction than a state income tax deduction," said IRS Commissioner Mark W. Everson.
The tables give taxpayers a sales tax deduction amount as an alternative to saving their receipts throughout the year and tabulating the amount actually paid. Taxpayers use their income level and number of exemptions to find the sales tax amount for their state. The table instructions explain how to add an amount for local sales taxes if appropriate.
Taxpayers also may add to the table amount any sales taxes paid on:
A motor vehicle, but only up to the amount of tax paid at the general sales tax rate; and
An aircraft, boat, home (including mobile or prefabricated), or home building materials, if the tax rate is the same as the general sales tax rate.
While this deduction will mainly benefit taxpayers with a state or local sales tax but no income tax - in Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming - it may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes. For example, a person may have bought a new car, boosting the sales tax total, or claimed tax credits, lowering the state income tax paid.
Taxpayers may download Pub. 600 from this site. A printed version will be available for mailing in a few weeks by calling (toll-free) 1-800-TAX-FORM (1-800-829-3676).
Related Item: Pub. 600 (PDF 93K) ?- Optional State Sales Tax Tables
roger wrote:it may give a larger deduction to any taxpayer who paid more in sales taxes than income taxes
Well that counts me out. Thanks for the info!
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