taxes - shopping deduction!

It’s that time of year again, time to start thinking about filing your taxes. I always look forward to doing my taxes…probably because we always get a refund. If we had to pay, I’m sure I’d be singing a different tune. Speaking of paying taxes, for most of us, sales tax is a necessary evil. We pay it without even thinking twice about it, because we’re so used to sales tax. Now you can get a piece of that sales tax back, from the IRS.

Did you know that shopping can provide you with a deduction on your taxes? It’s true! You can claim deductions on state and local sales tax, and you can deduct even more if you purchased certain “big-ticket” items. You’ll find these deductions already built into tax preparation software like Turbo Tax, but if you file a paper income tax return, you’ll need to use form 1040 (Schedule A), not 1040A.

If you’ve saved all your receipts, you can claim the total sales tax you paid based on those amounts. (Make sure you DO have the receipts - no sense in claiming it if you can’t back those figures up in case of an audit!) If you didn’t hang on to your receipts, not to worry - there’s a sales tax table available for each state. It’s based on what an average taxpayer pays out in sales tax, and your income, filing status, and the number of children or other deductions you have is taken into consideration. You may want to consider saving your receipts in the future though, and then you’ll be able to compare your actual tax paid versus what the tax table states. Depending on what you did in the previous year, you may find that your sales tax paid is quite a bit higher than the taxpayer average in the sales tax tables. For example, my family moved in 2006, and bought a lot of new furniture, appliances, and a new car. Our sales tax paid is going to be higher than the average taxpayer. Speaking of that new car, there’s an option to add in tax paid on new cars and boats. You can add it right on top of your average sales tax deduction. The IRS also allows the Treasury secretary to add other items to the new car and boat rule as he sees fit.

Remember, if you’re using online filing, you’ll find that the software is updated with all of the latest tax information. If you’re using paper, make sure you’ve read the newest rulings on credits and deductions so that you get the money you deserve!

Technorati Tags: sales tax, taxes, Turbo Tax, online filing, paper filing, IRS, deductions

One Response to “taxes - shopping deduction!”

1. Simple Kind Of Life » tax time Says:
   January 22nd, 2007 at 6:10 pm

   […] I’ve already started doing our taxes. I actually look forward to it every year. I use Turbo Tax online and love it. I was able to get my W-2 today, so now we’re just waiting on Jim’s and a few other bits and pieces, like my 1099 from PayPerPost. I also need to look up how much we paid in sales tax on my new truck, because you can deduct that - sweet! […]

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