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Sales Tax Deduction

By Tal Rozen

Under the The American Jobs Creation Act of 2004, a taxpayer can select to deduct the sum paid for local and state sales taxes.
Taxpayers must choose between these deducting sales tax or state income tax paid. The deduction is more efficient for taxpayers who reside in a state with no income tax (such as Texas, Florida, etc...), or whose sales tax deduction is larger than their state income tax deduction. There are two ways to calculate sales tax deduction: 1) "Actual Sales Tax Expenses", and 2) "Optional Sales Tax Table", to use it in your tax return, please click here.
Under Actual Sales Tax Expenses a taxpayer must Keep all of his/her sales tax receipts, and sum up the total amount of sales tax actually paid through out the tax year. Under the second way, "Optional Sales Tax Tables" taxpayer uses the amount provided in the IRS Sales tax calculator and adds sales taxes paid on the purchase or lease of a vehicle, boat, aircraft, payment for substantial addition or major renovation of a home. Where do I report Sales tax deduction? it is claimed as part of the itemized deductions on IRS form 1040, Schedule A, Line 5
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