While we waive good bye to this deduction moving forward, our Reach Back and Save Taxes for 2017 theme continues with the current Sales tax deduction.
Sales Tax Deduction Maximization
This deduction is most applicable in states that do not have a state levied income tax. Those states with a state income tax may tend to offset this deduction. Check with your professional or software before electing this if you live in a state with taxes.
Sales tax deduction is the standard deduction that you receive based on your geographic area and your income. This deduction flowing into your itemized deductions (you must itemize to claim) shows up on Schedule A, number 5 B.
Here are a few items that may make your standard sales tax deduction drastically inaccurate and woefully low- thereby costing you tax dollars:
- Bought a large Asset – Think Car or other similar item
- Had more then normal personal taxed expenses – for whatever reason
- Large Taxable Asset of any kind purchased
- Major expense where you paid sales tax – Think Wedding, Large Party
If you review your standard deduction and you find that one or two of your larger ticket items gets you above your standard, begin adding all of the items you paid sales tax on during the year. There is no limit to this amount of deduction, but you must be able to prove you actually spent this amount.
Handy tricks include getting an itemized statement from your credit card company or bank so as to easily calculate your sales tax total paid on these items.
Have a happy “Sales Tax Maximized Deduction” Day!
John A. Kvale CFA, CFP
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