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Itemized Deductions Schedule-A


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Old 03-04-2008, 03:00 PM
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Why Taxpayers should review State Taxes paid in 2007 versus Sales Taxes Paid in 2007?

Taxpayer have an option to claim either the higher of State and Local Taxes Paid or Sales and Local Sales Taxes Paid as an itemized deduction on their Schedule A. But, taxpayers are not allowed to claim both the taxes in 2007.

Clearly, the sales and local taxes paid can easily be determined through W-2 withholdings, but the amount of sales taxes paid have to be determined manually by collecting all the receipts for all of the 2007 expenses and adding up the total amount of sales taxes you actually paid and claim that amount. This would be rather painful and the IRS finally recognized that and an alternative was provided.

The IRS has generously provided us with the Sales Tax Calculator. This will allow taxpayers to go through a series of steps and the IRS will provide the Taxpayer a computer generated General Sales Tax Deduction. In addition, any specific sales taxes paid such as a large ticket items, Vehicle, Boat, RV, etc can be added to the IRS General Sales Tax Deduction. The total of this amount should be compared to the amount of State Taxes Withheld, the taxpayers can then select the larger of the two items.

Here is the IRS link to the Sales Tax Deduction Calculator. Please click the link and follow the steps that require input per State, Zip Code, Number of Exemptions claimed on the tax return along with the Taxpayers Salary Range.

Sales Tax Deduction Calculator

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Old 03-04-2008, 08:18 PM
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Thanks a lot!

So, effectively, I can go through the IRS Sale Tax Deduction Calculator and add the sales taxes on my major new appliances bought in 2007 and compare it my state and local taxes withheld, and choose the higher of the two!

That's easy to do rather than save receipts for the whole year..



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