Sales Tax Question

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Dylan1982
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Sales Tax Question

Postby Dylan1982 » Mon Dec 22, 2014 4:36 pm

My co-worker was mentioning to me that you can write off sales tax from items that you purchase throughout the year? Is there any truth behind this?


I was bored at work today and created a spreadsheet to keep track of items I bought (Jan 2015 - Dec 2015), price I paid (before tax), how I paid in sales tax and what the final price was (after tax). I also already have 12 folders at home to keep track of all my receipts as a well.


If he's wrong and I created the spreadsheet no big deal, literally took me 10 mins to do as I deal with Excel on a daily basis.


If it matters I am in IL.


Any thought or input would be greatly appreciated.
Chase Freedom - $12,500 (2/2013)
GM Card - $7,700 (7/2002)
CitiBank (Thank You Preferred) - $6,400 (6/2012)
CitiBank (Diamond Preferred) - $4,600 (6/2012)
Rogers & Hollands - $3,300 (3/2006)
Target REDcard - $3,000 (11/2014)
BestBuy - $1,600 (9/2003)
Discount Tires - $1,000 (2/2004)
Kohl's - $300 (4/2012)


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CarefulBuilder14
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Postby CarefulBuilder14 » Mon Dec 22, 2014 5:09 pm

You can choose between taking a sales tax deduction OR a state and local income tax deduction.

From IRS Pub 17:

"General Sales Taxes

You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction.

Actual expenses. Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Do not include sales taxes paid on items used in your trade or business.

Motor vehicles. For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business."

Note: I am an Enrolled Agent - a federally authorized tax professional. Sales and use taxes can be very complicated, though, and I can't give the amount of time to researching details of your situation that I could if you were a paying client. So don't rely on this as professional tax advice. I give this merely as help to point you in the right direction for further research.
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djrez4
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Postby djrez4 » Tue Dec 23, 2014 4:38 pm

Dylan1982 wrote:I was bored at work today and created a spreadsheet to keep track of items I bought (Jan 2015 - Dec 2015)


Time traveler!

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Dylan1982
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Location: Chicago

Postby Dylan1982 » Tue Dec 23, 2014 4:51 pm

LOL.... Should have read:


I was bored at work today and created a spreadsheet to keep track of items that I will buy from Jan 2015 - Dec 2015.
Chase Freedom - $12,500 (2/2013)
GM Card - $7,700 (7/2002)
CitiBank (Thank You Preferred) - $6,400 (6/2012)
CitiBank (Diamond Preferred) - $4,600 (6/2012)
Rogers & Hollands - $3,300 (3/2006)
Target REDcard - $3,000 (11/2014)
BestBuy - $1,600 (9/2003)
Discount Tires - $1,000 (2/2004)
Kohl's - $300 (4/2012)



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