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Sales tax deduction when itemizing taxes
Posted on 9/17/14 at 2:02 pm
Posted on 9/17/14 at 2:02 pm
I live in TX (so no state income tax) and the wife and I have had some major expenses this year. We bought a receipt scanner that does a decent job of picking up and populating the tax amount in a database, so we're aren't having to manually key in each amount and we have a scanned backup in case the IRS comes call. We've started saving every receipt, even those with tax less the $1.00.
Any tips or warnings for taking this deduction? Am I raising a huge red flag with a sales tax deduction 3 or 4 times the IRS calculator amount? The wife and I are fairly high earners (and spenders) so I feel like this will be something we do every year from now on.
Any tips or warnings for taking this deduction? Am I raising a huge red flag with a sales tax deduction 3 or 4 times the IRS calculator amount? The wife and I are fairly high earners (and spenders) so I feel like this will be something we do every year from now on.
3
Posted on 9/17/14 at 2:16 pm to sneakytiger
I've read a couple of things that say taking a huge sales tax deduction is a red flag, but in the 5-6 years I prepared returns I never saw it questioned. But I also hardly ever prepared returns for states with no income tax, so most of my returns were taking the state income tax deduction.
Even if it does raise a red flag, if you have the backup to support it, you shouldn't have anything to worry. Might wouldn't hurt to segregate out major purchases(say over $1000) as there is a separate line for sales tax on major purchases.
Even if it does raise a red flag, if you have the backup to support it, you shouldn't have anything to worry. Might wouldn't hurt to segregate out major purchases(say over $1000) as there is a separate line for sales tax on major purchases.
Posted on 9/17/14 at 2:35 pm to The Spleen
Even though it's not broken out any receipts that I've seen, could you deduct tax paid on gasoline purchases? That's technically sales tax right?
Posted on 9/17/14 at 2:38 pm to sneakytiger
I'm not sure about TX, but a percent of the gas tax in LA goes to the transportation trust fund. Not sure if that's the same as sales tax or not.
Posted on 9/17/14 at 2:49 pm to sneakytiger
I have no idea if taxes on gasoline purchases could be included, but I'd lean towards no. And I should have added it was 5 years ago when I last prepared returns, so I'm not as hip on the laws as I used to be. I keep up to date to prepare mine and some family member's returns and that's really it.
There's another poster here that is really sharp on tax questions. He has Houston in his screen name, so I assume he is in Houston and would be more helpful for questions in a state with no income tax.
There's another poster here that is really sharp on tax questions. He has Houston in his screen name, so I assume he is in Houston and would be more helpful for questions in a state with no income tax.
Posted on 9/17/14 at 3:13 pm to sneakytiger
It's not a red flag... but... at this point, we don't have a state and local sales tax deduction for 2014. The provision expired in 2013. Now, I have every reason to believe it will be extended to 2014 - probably after the elections - and made retroactive to the beginning of 2014. This has happened before. But, as we stand here now, there is no deduction available. Just needed to say that.
I never had a client audited on this issue. If you are a high earner, the expectation is that you are also a high spender, so when the IRS does their statistical analysis, it takes that into consideration.
Did you have any really, really big ticket items, like a huge vehicle or boat or something? On those items, you can add the tax paid on those items to the amount the IRS tables list out.
Yeah, I lived in Houston for a number of years and did tax work there. I moved back home to NOLA a couple of years aqo and never changed my screen name!
The tax on gasoline is not based on the sales tax, i.e. it is not a sales tax. It is an excise tax based on gallons.
I never had a client audited on this issue. If you are a high earner, the expectation is that you are also a high spender, so when the IRS does their statistical analysis, it takes that into consideration.
Did you have any really, really big ticket items, like a huge vehicle or boat or something? On those items, you can add the tax paid on those items to the amount the IRS tables list out.
quote:
He has Houston in his screen name, so I assume he is in Houston and would be more helpful for questions in a state with no income tax.
Yeah, I lived in Houston for a number of years and did tax work there. I moved back home to NOLA a couple of years aqo and never changed my screen name!
quote:
sales tax gasoline
The tax on gasoline is not based on the sales tax, i.e. it is not a sales tax. It is an excise tax based on gallons.
Posted on 9/17/14 at 5:51 pm to sneakytiger
Not that I would know anything about this, but gas taxes are excise taxes, not sales tax.
Posted on 9/17/14 at 9:47 pm to sneakytiger
Lived in Houston until a few months ago-I don't do my taxes personally but my advisor has me give him a number that I can substantiate every year, I was audited and they did not even ask a question about that line item. I probably could get a little more if I was as organized as you. Take it if you can. If you drop a detailed spread sheet, bank statements and receipts on them they'll fold like a pup tent...
Posted on 9/17/14 at 10:12 pm to misterc
I see the massive amount of receipts I will likely have at the end of the year as a piggy bank... every dollar I pay in sales tax is 30 cents less that I have to pay the IRS. 
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