Sales Tax deduction renewed for 06' tax year

SargeW · 01-22-2007, 06:04 AM

This was kind of important, so I thought I would put it in it's own thread. I searched the IRS web site last night and found that the sales tax deduction option is renewed for the 06' tax year. What that means to us is that if you had a major purchase, like a new RV, you can use the sales tax as a deduction on your Federal tax return INSTEAD of the standard deduction.

If your state charges significant sales taxes on a new purchase (like Ca has a 7.75% to 8.5% tax rate) then your sales tax will probably be over the $10,000 standard deduction. Then you can add up all the sales taxes you have paid throughout the year (that you have receipts for) and use that as a deduction on your 06' return.

Since I bought my RV and a Jeep tow vehicle last year, I will be easily over the standard deduction limit. Plus I track all my expendatures through the year with Quicken, so all my receipts are documented. Check it out, you could save some money from the Feds!

Information is heretax caculator

SargeW · 01-22-2007, 06:04 AM

This was kind of important, so I thought I would put it in it's own thread. I searched the IRS web site last night and found that the sales tax deduction option is renewed for the 06' tax year. What that means to us is that if you had a major purchase, like a new RV, you can use the sales tax as a deduction on your Federal tax return INSTEAD of the standard deduction.

If your state charges significant sales taxes on a new purchase (like Ca has a 7.75% to 8.5% tax rate) then your sales tax will probably be over the $10,000 standard deduction. Then you can add up all the sales taxes you have paid throughout the year (that you have receipts for) and use that as a deduction on your 06' return.

Since I bought my RV and a Jeep tow vehicle last year, I will be easily over the standard deduction limit. Plus I track all my expendatures through the year with Quicken, so all my receipts are documented. Check it out, you could save some money from the Feds!

Information is heretax caculator

Ecker · 01-22-2007, 10:13 AM

There's an inportant modifier in there -you can clain state income tax or sales tax not both.

RustyJC · 01-22-2007, 11:31 AM

This really benefits those individuals who live in a state like Texas that has no state or local income tax.

Rusty

Y-Guy · 01-30-2007, 11:13 AM

Rusty is right, for those of us in Washington State this is a big deal. Between our Motorhome, Jeep Liberty and a couple other things its a nice deduction for us. It wasn't a make or break issue but I was keeping tabs on the status before we bought our new rig.

Cruzer · 01-30-2007, 11:22 AM

Interestingly enough we just receieved the IRS's publication 600 in the mail yesterday with the information and worksheets. There was nothing mentioned in the Form 1040 previously except a footnote explaining that a change was being contemplated at thetime of the 1040 printing.

Y-Guy · 01-30-2007, 11:42 AM

Yep because congress failed to act in time they went to press. Now they have to reprint all the forums. Talk about yet another waste of tax dollars.

RustyJC · 01-30-2007, 11:51 AM

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Cruzer:
Interestingly enough we just receieved the IRS's publication 600 in the mail yesterday with the information and worksheets. There was nothing mentioned in the Form 1040 previously except a footnote explaining that a change was being contemplated at thetime of the 1040 printing. </div></BLOCKQUOTE>
I read in the paper that, if you file electronically and plan to take the sales tax deduction, don't file until after February 3 since the IRS won't be set up to accept returns claiming this deduction until then.

Rusty

SeeTheUSA · 01-30-2007, 12:18 PM

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by RustyJC:

I read in the paper that, if you file electronically and plan to take the sales tax deduction, don't file until after February 3 since the IRS won't be set up to accept returns claiming this deduction until then.

Rusty </div></BLOCKQUOTE>

That's right --- the whole thing has my return in limbo. And here I was all set this year, got everything done on one of those online tax preparation sites by 01/24 and at the very end --- when trying to file electronically --- I'm told I have to wait!

Oh well, just one of those slightly annoying things which comes from living in the GREATEST COUNTRY IN THE WORLD!