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Tax and Tax Information - Sales Tax Deduction

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Tax and Tax Information * Sales Tax Deduction

How Can Sales Tax Save You Money?   
Steve Dolan

It's that time of the year again... tax time! It may not be one of the more enjoyable times of the year, but it is definitely one of the more important dates on the calendar.

Hopefully, you have listened to all the advice and have started planning in advance. If so, you probably already know that the government has introduced a new way for you to lower your federal taxes, maybe even dramatically lower your taxes; you now have the choice to claim your state sales tax to lower your taxable income on your federal tax return.

Article to continue below----------------------------------------------

U.S. Sales Tax Rates Hit Record High (Forbes)
Shopping blues: Top tax 12%. Chicago's 10.25% highest big-city rate. More Internet tax fights loom.

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Deducting your sales tax in the US


While you used to be able to deduct amounts paid in state sales tax, Congress took it off the books in the Tax Reform Act of 1986. Thanks, Congress. Fortunately, it is now back. Depending on your specific circumstances and where you live in the US, this could be extremely important for your tax planning.

Article to continue below----------------------------------------------

No Blowing Smoke: Group Discusses SC Cigarette Tax (AP Via Yahoo! Finance)
Doctors and an anti-smoking group discuss efforts to raise South Carolina's 7-cent-a-pack cigarette tax that is the lowest in the nation.
Tax Tips For The Unemployed (CNN Money)
Tax time can be a painful time for many of us, and it's especially tough for people without jobs. If you're unemployed, there are a few twists and turns in the tax code that can work to your benefit.

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Deducting your state income tax vs. state sales tax


The change in the law means you now have the choice between deducting your state income tax vs. your state sales tax. No matter what you choose, however, you have to first decide to itemize your deductions. Instead of going through the process of itemizing your deductions, the IRS gives you the opportunity to take a pre-determined deduction from your taxable income, based on your income level and state of residence. According to the IRS, most people will simply chose the pre-determined number - as many as 66% of all tax payers take the easy way out. For some people, the pre-determined numbers is going to be the better choice. A lot of the people who choose the pre-determined deductions, however, are doing so for the sake of simplicity. Plan ahead and make sure you are picking the best option before signing on for the pre-determined deductions.


The ability to deduct amounts paid in state sales tax could significantly lower the amount of money you end up paying in income tax, or at least lower than what you would pay under the pre-determined deductions. This ability is particularly important if you live in one of the few states - Wyoming, Washington South Dakota, Tennessee, Florida, Texas and Nevada - where there is no state income tax. Previously, if you were a resident of this state you could not claim any state tax deductions. Now, thanks to the new rules, if you are a resident of one of these lucky states you can now claim their state sales tax to reduce their taxable income on their US tax forms. When will you be better off deducting your state sales tax? If you have made any significant purchases - such as a car, a boat, an airplane, luxury items or major events such as a wedding - the sales tax you paid last year could be more than you paid in state income taxes.


Save your receipts!


The most important thing to get your finances in order is to start planning for tax time now. The ability to deduct amounts paid for state sales tax will only be useful if you have the receipts to back your itemizations up. Make sure you hold on to receipts for your expensive items, and fight the natural instinct to take the easy way out and select the pre-determined deduction. If you have paid a lot of state sales tax in the US, this is your chance to pay less tax to the federal government.



Steve Dolan has the good fortune to be married to a CPA so out of death and taxes he has one covered. Find out about sales tax issues at Sales Tax and Save Taxes and for general tax info go to Tax and Taxes

What Other Authors say about Taxes

Avoid Annuity Tax Problems by Tony Novak

Millions of investors own retirement annuity accounts but few are aware of the tax implications when the annuity is passed to an heir or beneficiary. A little known tax fact is that income tax on an individually...

Filing An Income Tax Return by Gray Rollins

When the month of April rolls around most of America is preparing their income tax returns. Each year all individuals who made an income are required to report that income to federal and state governments...

how to compute tax withholding amount by Steven Chang

Having the correct tax withheld for the year is important for a couple of reasons. Having too little taxes withheld and most likely you will need to pay taxes, and having too much withheld means that you...

OMG-More Discussion About The Home-Based Business by Ron Piner, CPA

"Oh My God", cries out my fifteen year old daughter. "Oh My God Is Right", replies her brilliant and handsome father. This is an example of two people saying the very same thing, but for entirely different...

Doing Your Taxes by Carl LaFresnaye

When an individual is younger, it is much easier to do taxes at the end of the year since there usually is not anyone to claim other than the individual him or herself, as well as the fact that not many...

Tips For Preparing Your Taxes from the Internet by Cal Golden

When it comes to preparing our taxes, many of us could use some help. The following websites offer guidance and information that may assist you in learning about how to get the most out of filing your...


Who are the CPA Moms?      Your Tax Professional Forever!!!!

“CPA Moms - Tax Moms - EA Moms" are trade names given to Accounting and Tax Professionals who chose to work in an “relaxed” environment. Some "Moms" work from home, other work from personal offices. Not all are Moms, there are some Dads. We call them Mr. Tax Moms. CPA Dads or Enrolled Agents Dads.
Each Mom is independent. Once a client starts working with a Mom, the client will keep the same “Mom” year after year regardless of where the client moves or relocates. Being in a “relaxed” environment has many advantages. Lower overhead, faster response time, more availability, etc.
To be a member a CPA Mom, Tax Moms, or an Erolled Moms the Tax Professional must ALWAYS be in good standing with their state licensing agency, experienced, and must demonstrate a high level of ethics, professionalism and proficiency.
Tax Net Inc, the parent company for all CPA Moms, Tax Moms and Enrolled Moms, developed the marketing and on-line systems to help qualified Tax Professionals who "choose" work from their “relaxed” environment and offer better service at a lower price to the consumer.
Since the “Moms” do taxes and accounting of all complexities, there is always a Mom available for every level of work. Since each Mom has a private 800 number, you are just a phone call away, regardless of where you live.
For reliability and dependability of Tax Net, Inc, the parent company of the “Moms” organization click on the Better Business Bureau (BBB) icon.

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Index of Articles about Taxes

What Other Authors say about Taxes

Avoid Annuity Tax Problems by Tony Novak

Millions of investors own retirement annuity accounts but few are aware of the tax implications when the annuity is passed to an heir or beneficiary. A little known tax fact is that income tax on an individually...

Filing An Income Tax Return by Gray Rollins

When the month of April rolls around most of America is preparing their income tax returns. Each year all individuals who made an income are required to report that income to federal and state governments...

how to compute tax withholding amount by Steven Chang

Having the correct tax withheld for the year is important for a couple of reasons. Having too little taxes withheld and most likely you will need to pay taxes, and having too much withheld means that you...

OMG-More Discussion About The Home-Based Business by Ron Piner, CPA

"Oh My God", cries out my fifteen year old daughter. "Oh My God Is Right", replies her brilliant and handsome father. This is an example of two people saying the very same thing, but for entirely different...

Doing Your Taxes by Carl LaFresnaye

When an individual is younger, it is much easier to do taxes at the end of the year since there usually is not anyone to claim other than the individual him or herself, as well as the fact that not many...

Tips For Preparing Your Taxes from the Internet by Cal Golden

When it comes to preparing our taxes, many of us could use some help. The following websites offer guidance and information that may assist you in learning about how to get the most out of filing your...