One tax deduction youcan sometimes take as an itemized deduction is sales tax. The IRS has a table you can use or you can calculate your actual sales tax paid for the year (you thought you had to keep receipts before? Good luck.)
The only problem is you can take the larger of your sales tax deduction or your state income taxes paid – it is an either/or situaltion; you can’t take both. State income taxes paid includes any local income taxes (in CA, state disability insurance is considered a state tax). You add them both up and take the higher of the two: the other goes into the black hole of undeductible items (where that second sock in your drawer went to.)
That is the only possible reason to wade through your receipts to calculate sales tax – you may get a bigger deduction than the table and may result in some tax savings. Any questions, call me at 818-317-6035 or email me at bstonercpa@sbcglobal.net and I will try to answer them.
Tomorrow I will talk about real estate taxes.
You can count on us to count for you!