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Itemized Deductions Schedule-A


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Old 12-09-2017, 03:27 PM
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Sales Tax deduction

I'm a kitchen and bath contractor and I have a very good client that is building a new vacation home. I use a Marriott Rewards VISA during the normal course of business but he has told me that I need to set up accounts with my vendors and then let him go and pay the bill. Of course, I don't want to do that because of the hotel points but he says he needs to do this so he can claim the Sales Tax deduction. I'll do whatever a client asks but I had already ordered and paid for, $16,000 worth of plumbing fixtures so I offered to write him a separate invoice and itemize it like the supplier did and show the tax. I also forwarded him the original invoice emails. He said that wouldn't work... that HE had to be the one to pay the supplier otherwise the "tax credit" goes to me.

I didn't try to explain to him that I don't get a "tax credit" for materials on things I buy. I just add them to my normal cost of business and the sales tax (in regards to my business) is treated the exact same as a piece of plywood. It's just a cost of doing business, not a "Tax deduction."

Is he right? Does HE have to physically pay, let's say, Ferguson's (plumbing fixtures) himself, or can I just send him a copy of the invoice that I paid in my name with his job name?

Question #2
I am also a cabinet maker. On this job I have a full set of kitchen cabinets as well as five vanities and laundry room cabinets... probably about $30k. I'm a soul proprietor and I don't charge tax for the cabinets I build. It's just included in the total quote of the job. Should I, or could I, bill him separately for the cabinetry and show sales tax for his benefit? What are the ramifications on me if he gets audited?

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Old 12-10-2017, 02:13 AM
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I'm a kitchen and bath contractor and I have a very good client that is building a new vacation home. I use a Marriott Rewards VISA during the normal course of business but he has told me that I need to set up accounts with my vendors and then let him go and pay the bill. Of course, I don't want to do that because of the hotel points but he says he needs to do this so he can claim the Sales Tax deduction. I'll do whatever a client asks but I had already ordered and paid for, $16,000 worth of plumbing fixtures so I offered to write him a separate invoice and itemize it like the supplier did and show the tax. I also forwarded him the original invoice emails. He said that wouldn't work... that HE had to be the one to pay the supplier otherwise the "tax credit" goes to me. ========>In general, sales tax is charged by a vendor but rules vary by state. Many states exempt services. And within a state, the rules can be inconsistent, even crazy.;YOU AS A VENODR/SERVCIE ROVIDER, need to collect sales tax on most goods and some services that are delivered to a customer in any U.S. state in which you have any physical presence. Generally, if you're going to collect sales tax, you must get a license from your state. On each taxable transaction, you calculate the applicable sales tax, collect it from the buyer/client, keep tax records, and then file a tax return and pay the taxes to your state. You'll pay monthly, quarterly, or annually, depending on your level of sales. States call these taxes by various names: sales tax, franchise tax, transaction privilege tax, use tax, or etc. Some are the responsibility of the seller/vendor, others the client?s/ buyer's responsibility. But governments figured out that it was easier and more reliable to make the vendor/seller collect the tax than to get individual consumers to send in tax on every purchase. So, businesses are typically responsible for collecting sales tax and sending it to the state.you may contact the dept of revenue of your home state for mor e info in detail.

I didn't try to explain to him that I don't get a "tax credit" for materials on things I buy. I just add them to my normal cost of business and the sales tax (in regards to my business) is treated the exact same as a piece of plywood. It's just a cost of doing business, not a "Tax deduction." =====>You can either claim the standard deduction or itemize your deductions whichever lowers your tax the most.you maY claim your biz related sales taxes th at you pay only by itemizing your deductions on Sch A of 1040 aslongas itemize deductions exceed your std deductions. However, if the total amount of your itemized deductions is not greater than the standard deduction amount for your filing status, then you should take the standard deduction instead of itemizing.BUT your itemized deductions might total less than your standard deduction. If so, you can still itemize deductions rather than claim the standard deduction. You might want to do this if you?d pay less tax. This can happen if you itemize on your state return and get a larger tax benefit than you would if you claimed the standard deduction on your federal return

Is he right? Does HE have to physically pay, let's say, Ferguson's (plumbing fixtures) himself, or can I just send him a copy of the invoice that I paid in my name with his job name? ====>>as mentioned previously. You need to contact the dept of revenue of your home state for more info in detail.

Question #2
I am also a cabinet maker. On this job I have a full set of kitchen cabinets as well as five vanities and laundry room cabinets... probably about $30k. I'm a soul proprietor and I don't charge tax for the cabinets I build. It's just included in the total quote of the job. Should I, or could I, bill him separately for the cabinetry and show sales tax for his benefit? What are the ramifications on me if he gets audited?=========>>> If you sell physical goods in a particular state, you are probably required to collect sales tax from your customers. However, there are exceptions. Each state has its own unique list of taxable goods, which in most cases can be found on your State Department?s website under the Department of Revenue or you can contact an IRS enrolled Agent /a CPA doing taxes in yourlocal area for professional help.



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