Tax Break: The TurboTax Blog » sales taxes

What is the State and Local Sales Tax Deduction?

Michael Rubin — Thu, 21 Feb 2013 20:34:03 +0000

The State and Local Sales Tax Deduction expired in 2011, but was extended thanks to the American Taxpayers Relief Act of 2012. Consequently, certain taxpayers will still benefit from this important tax deduction.

What is the state and local sales tax deduction?

Many people are familiar with the fact that state and local tax payments, including real estate tax, property tax, and state income tax are tax deductible. A few years ago, Congress added sales tax to the list of deductible state and local taxes. However, it did so with a bit of a hitch: taxpayers must choose between deducting state and local income tax or state and local sales tax-not both. Taking the State and Local Sales Tax Deduction may be beneficial to you if you live in a state that doesn’t collect state income taxes or if you made large purchases and paid substantial local sales tax.

How do I calculate my state and local sales tax deduction?

To determine your state and local sales tax deduction, you can keep all of your receipts during the year and then, come tax time, add the sales taxes collected on all of them. Even if you don’t have all of the receipts TurboTax will help you estimate the value of your state and local sales tax.

If you have state income taxes that were withheld from your paycheck or that you paid and state and local sales taxes, TurboTax will automatically select the higher deduction for you, ensuring you keep more money in your pocket.

What else should I consider when thinking about the state and local sales tax deduction?

If you have relatively low income compared to spending or live in a state without an income tax, be sure to deduct your state and local sales tax deduction. TurboTax will walk you through the necessary questions and help you get this tax deduction if you’re eligible.

Are You Ready for a Summer Sales Tax Vacation?

Ginita Wall, CPA, CFP® — Sun, 15 Jul 2012 13:45:28 +0000

Back to school shopping can put a dent in your wallet, that’s for sure. But in some states that pain is eased a bit by summer sales tax vacations. If you are lucky enough to live in a state that has one, do your shopping during the designated dates and you can skip sales taxes on clothing, shoes, school supplies, electronics and books. Some states have extended the savings to hurricane preparedness supplies, energy-efficient appliances and firearms.

sales tax holiday

The first sales tax holiday was in New York in January 1997, to boost sales during the after-holidays retail slump. Now seventeen states are offering sales tax holidays, though New York is no longer doing so.

The sales tax holiday is usually three days, from Friday through Sunday, during a major shopping period such as just before school starts. The holiday applies to selected items, such as clothing and school supplies, and is often restricted by price, for example, clothing up to $100.

If you want to take a vacation from sales tax this summer, consult the list below to see when one is offered in your state, and then head for the air-conditioned mall to beat the summer heat and take advantage of the savings.

Happy shopping!

State	Days	Items Included/	Maximum Cost	1^st Year	2012 Dates	Information Links *
Alabama	3	hurricane preparedness generators - $1,000 supplies - $60		2012	July 6-8	http://www.revenue.alabama.gov/
Alabama	3	clothing - $100 computers - $750 school supplies - $50 books - $30		2006	August 3-5	http://www.revenue.alabama.gov/
Arkansas	2	clothing - $100 school supplies		2011	August 4-5	http://www.dfa.arkansas.gov/
Connecticut	7	clothing/footwear $300		2001	August 19-25	http://www.ct.gov/
Florida	3	school supplies - $15 clothing - $75		2010+	August 3-5	http://dor.myflorida.com/dor/
Georgia	2	school supplies - $20 clothing - $100 computer - $1,000		2012+	August 10-11
Georgia	3	energy and water efficient products - $1,500		2012+	October 5-7
Iowa	2	clothing - $100		2000	August 3-4	http://www.iowaccess.org/tax/
Louisiana	2	all TPP - $2,500		2007	August 3-4	http://www.revenue.louisiana.gov/
Louisiana	2	hurricane preparedness items - $1,500		2008	May 26-27	http://www.revenue.louisiana.gov/
Louisiana	3	firearms, ammunition and hunting supplies		2009	September 7-9	http://www.revenue.louisiana.gov/
Maryland	3	energy star products		2011	February 18-20	http://www.comp.state.md.us/
Maryland	7	clothing & footwear-$100		2010	August 12-18	http://www.marylandtaxes.com/
Mississippi	2	clothing & footwear – $100		2009	July 27-28	http://www.dor.ms.gov/
Missouri	7	energy star products$1,500		2009	April 19-25	http://dor.mo.gov/
Missouri	3	clothing - $100 computers - $3,500 school supplies - $50		2004	August 3-5	http://dor.mo.gov/
New Mexico	3	clothing - $100 computers - $1,000 school supplies - $15		2005	August 3-5	http://www.tax.newmexico.gov
North Carolina	3	clothing - $100 school supplies - $100 instructional material - $300 computers - $3,500 other comp. - $250 sports equip - $50		2001	August 3-5	http://www.dornc.com/
North Carolina	3	energy star products		2009	November 2-4	http://www.dornc.com/
Oklahoma	3	clothing - $100		2007	August 3-5	http://www.tax.ok.gov/
South Carolina	3	clothing school supplies computers other		2000	August 3-5	http://www.sctax.org/
South Carolina	2	guns, rifles & handguns		2008	November 23-24
Tennessee	3	clothing - $100 school supplies - $100 computers - $1,500		2006	August 3-5	http://tn.gov/revenue/
Texas	3	energy star products air conditioners – $6,000; other – $2,000		2008	May 26-28	http://www.window.state.tx.us/
Texas	3	clothing,backpacks and school supplies- $100		1999	August 17-19	http://www.window.state.tx.us/
Virginia	7	hurricane preparedness items - $60 generators - $1,000		2008	May 25-31	http://www.tax.virginia.gov/
Virginia	3	clothing - $100 school supplies - $20		2006	August 3-5	http://www.tax.virginia.gov/
Virginia	4	energy starproducts $2,500		2006	October 5-8	http://www.tax.virginia.gov/

The State Sales Tax Deduction

JoeTaxpayer — Fri, 06 Jan 2012 20:45:38 +0000

Are you one of the lucky ones to live in a state with no state income tax? (Alaska, Florida, Nevada, New Hampshire, South Dakota, Texas, Washington, and Wyoming in case you are planning your next move with an eye toward your tax bill).

State Sales Tax

This year, those who itemize their deductions have a choice to deduct, either the amount of state income tax paid or state and local general sales taxes paid. It’s either/or, you cannot take both. For those with a state income tax, that tax will often be far higher than the sales tax paid over the year, which is why I highlighted those states with no income tax at all.

Even if you do have a state income tax, it’s still possible that in a high spending year, perhaps including a car purchase or major remodeling along with all the high priced appliances, that the sales tax will total more than your state income tax. Either way, it’s worth taking a bit of time to see if this deduction can benefit you.

Hopefully, if you are going to use the sales tax deduction, you’ve been saving your receipts to document your total claimed sales tax. If you haven’t, or perhaps you only have the bill of sale for that new car or boat, there’s still an option for you.

You can enter your combined state and local sales tax rate and TurboTax will make the behind the scenes calculations for you, per IRS guidelines, to determine the accurate state and local sales tax deduction for you. If you don’t know your state and local sales tax rates, TurboTax will also calculate your deduction based on just your home state sales tax rate.

One thing to note, taxpayers often think that they will be able to deduct more, because they think the deduction is their gross income times their sales tax rate, however per IRS guidelines, the sales tax deduction is a result of the sales tax rate times an amount based on your income from the IRS State and Certain Local Sales Tax Table and not your entire income.

Tax Tip: You have the option to deduct sales tax instead of state income tax, even if you live in a state without a state income tax.

Don’t miss out! Unless Congress extends the rule allowing the deduction of sales tax, 2011 is the last year to add it to your itemized tax deductions.

Understanding the Hidden Taxes and Fees Associated with Airline Travel

joshritchie — Tue, 16 Aug 2011 20:15:49 +0000

It is easy to miss the number of taxes and additional fees that are applied to airline tickets in the United States. With airport and airline security at it’s highest and a down economy, the government continues to increase the rates on taxes and fees that have gone unnoticed by many over the last decade. Let’s define and shed light on these rates and charges that will be applied to your tickets the next time you travel with the airlines.

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