Can someone explain if its better to use the sales tax deduction if a big item was purchased or use the state income taxes paid from retirement income? Does either affect my social security benefits?
Sales tax has nothing whatsoever to do with your Social Security benefits.
Before you pursue itemized deductions any further....have you had income from which tax was withheld? If you have not had any tax withheld from your income, entering itemized deductions will have no effect at all on your tax due or refund.
Sales tax is an itemized deduction that goes on Schedule A with other itemized deductions like mortgage interest, medical expenses or charity donations. If you will not have enough itemized deductions to exceed your standard deduction, entering sales tax has no effect.
And -----refunds come from having too much tax withheld from your income during the year----so again---was tax withheld from your income?
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts) The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the tax laws that have been in effect since 2018, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
The standard deduction makes some of your income “tax free.” It is not a refund. You will see your standard or itemized deduction amount on line 12 of your 2024 Form 1040.
2024 STANDARD DEDUCTION AMOUNTS
SINGLE $14,600 (65 or older/legally blind + $1950)
MARRIED FILING SEPARATELY $14,600 (65 or older/legally blind + $1550)
MARRIED FILING JOINTLY $29,200 (65 or older/legally blind + $1550)
HEAD OF HOUSEHOLD $21,900 (65 or older/legally blind + $1950)