can I now deduct sales tax off federal taxes?

genchan · #1 (**permalink**) 11-02-2004, 08:01 PM

I read that we can now deduct the sales tax we pay off our federal taxes. Is this true? If it is, how do we know how much we can deduct? Do we need receipts for all our purchases?

terry1156 · #2 (**permalink**) 11-03-2004, 06:26 PM

Yes and no. The way I understand it is you have the choice of deduction sales tax or your state income tax for 2004 and 2005. This is a good deal for those who live in states with low or no state income tax. You have to itemize to get this.

This change happened in October so most people won't have receipts, but IRS is supposed to have a "cheat sheet" table you can use to determine your qualificating sales tax (of course, the more information you have, the better since your actual spending will probably be more than the IRS tax table will give).

The one good thing is that large purchses such as a car can be added on top of the IRS table.

Tree0164 · #3 (**permalink**) 11-04-2004, 03:29 AM

Oh wow I didn't this tibit of info. Any references on line?

terry1156 · #4 (**permalink**) 11-04-2004, 04:51 AM

<A HREF="http://www.bankrate.com/brm/itax/20041012b1.asp">This is where I read about it</A>.

genchan · #5 (**permalink**) 11-07-2004, 07:20 PM

Where can I find the tables that shows how much sales tax can be deducted?

terry1156 · #6 (**permalink**) 11-07-2004, 11:32 PM

I don't think that the tables have been made yet.

jeffrey · #7 (**permalink**) 11-08-2004, 03:04 AM

That is correct...the tables have not yey been released. They should be released at the beginning of the New Year. You can read a bit more about this in <A HREF="http://www.savingadvice.com/forums/showthread.php?t=2784">our article on this subject here</A>.

genchan · #8 (**permalink**) 11-08-2004, 03:15 AM

Thanks for putting together that article. One other question. You say that sales tax for cars and boats can be added seperately. How about for a house? It would be great if I could deduct the sales tax for the house I want to buy.

jeffrey · #9 (**permalink**) 11-08-2004, 06:13 AM

The law says that taxpayers will be able to add to the table amount the IRS creates the sales tax paid on "motor vehicles, boats, and other items specified by the (Treasury) secretary." The speculation is that the secretary will expand this list to include a number of high priced items, but that is only speculation at this point.