If you are trying to take the deduction for sales tax, you must choose between income taxes paid and sales tax. You cannot deduct both. If you live in a state where you have an income tax, that is generally the most beneficial deduction for you. State and local tax deductions (including real estate) are capped at $10,000.
To take the sales tax deduction:
- From the Federal menu, Choose Deductions & Credits
- Expand the menu for Estimates and Other Taxes Paid
- Click Start/Revisit next to Sales Tax
- Choose to try the sales tax deduction and click EasyGuide on the next screen
- Choose your state.
- Enter the tax rate for your location. Click Continue.
- Answer Yes to the question Did you buy any major items.
- On the following screen, enter the requested information and include the sales tax paid for the purchase of your vehicle
Keep in mind, these deductions are part of itemized deductions and will only affect your return if you are itemizing.
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