Tag Archives: Sales Tax Deduction

Schedule A, 5 B – Part 4 of our Tax Savings Reach Back Series – Maximizing the Sales Tax Deduction!

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 Maximizationsales tax - credit card -pexels-photo-259200

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

Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
www.jkfinancialinc.com
www.street-cents.com
Video

April 2014 Financial Planning, Economic and Capital Market Review (Video)

Welcome to our monthly review of the latest events of the last four weeks. With the tax season being so rough and fresh on our minds, we start with a much-needed tax related Financial Planning Tip.

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Vimeo Direct Link Here

Getting the Most Out of the Sales Tax Deduction

This months Financial Planning was once again straight from the field and this time from a relative.

Those using Schedule A, receive the benefit of deducting a pre-set amount of sales taxes based on your income, zip, and number of exemptions OR using your actual sales tax that you have paid over the year.

This is from the IRS’s website

If you didn’t save all your receipts, you can still choose to claim state and local sales taxes. You could fill out the worksheet and use the optional general sales tax tables in the Instructions for Schedule A (Form 1040) , but why not take the easy route and use the Sales Tax Deduction Calculator!

Take note of that friendly last comment from the IRS.  Most of the time the easy route is probably best, however if you have any of the following, consider double checking your “easy route” amount versus your paid:

  • Car Purchase, boat, aircraft or lease vehicle
  • Substantial additional renovation of home
  • Unusually large taxable purchase of any kind
  • Easily accessible receipts (often via debit cards or other easily traceable sources)

Capital Markets, Gold, or Rates ?

Recently I challenged a group as to what they thought were the most important item currently, choosing from the Dow, Gold or interest rates.

Hands down, interest rates. This is the 10 year treasury rate, seen hovering over the voodoo chart line.

10 Year Treasury 5-1-14

We are watching this closely as we just do not know why it is persistently staying so low. Late in April the FOMC lowered their bond purchases by another $10 billion monthly. Recall these purchases were to keep rates down. Doh… Seems as if rates do not know they should be rising.

Have a Great Day!

John Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225