@mill1174 wrote:
Why is it that individuals can take a general deduction for sales tax based on their specific rate then?
Let's take a step back and clarify how the sales tax deduction works. This is a very lengthy explanation, but at the end I will point out something that might help in your specific situation.
There are two ways to determine the amount of sales tax that you can deduct: (1) actual sales tax paid, or (2) the sales tax table.
(1) Actual sales tax paid
Using the actual sales tax paid is a lot of work. You have to save all the receipts that you get all year that have sales tax on them. When you do your tax return you have to add up the sales tax on all the receipts. The total is the amount you can deduct. If you bought something and paid sales tax, but didn't get a receipt, or didn't save the receipt, you can't deduct that sales tax. You have to have the receipts in order to deduct the sales tax. If you returned a purchase and got a refund that included the sales tax, you have to omit that sales tax from the total.
If you use the actual sales tax, in general you can only deduct sales tax if the rate is the same as the "general sales tax rate." However, for food, clothing, and medical supplies you can deduct the sales tax if the rate is less than the general sales tax rate. For motor vehicles you can deduct the sales tax if the rate is less or more than the general sales tax rate, but if it's more you can only deduct an amount equal to the general sales tax rate.
If you use the actual sales tax, you don't make any special additions. Basically you just add up the sales tax on all the receipts, and the total is what you can deduct.
(2) Sales tax table
The sales tax table allows you to deduct an average amount of sales tax based on your income, family size, and what state you live in. It's much simpler, and much less work, than adding up the actual sales tax that you pay all year. You just look up the amount you can deduct in the table. When you use the sales tax table, you can add to the amount from the table the sales tax that you paid on certain "specified items." As I said earlier, the specified items are a motor vehicle, an aircraft, a boat, a home, or a substantial addition to or major renovation of a home. That's the only addition you can make to the amount from the table. Most people use the sales tax table because using the actual sales tax is just too much work.
In spite of how long this explanation is, I didn't cover all the details. Again, there is more detail and additional rules in the IRS instructions for Schedule A.
Now, regarding your specific situation, I'm sure you didn't save all the receipts for everything that you bought during the year. But if you paid a large amount of sales tax for a few major purchases such as the house painting, even though they aren't "specified items," you might find that the sales tax on those few major purchases is more than the amount from the sales tax table. If that turns out to be the case, you could use the actual sales tax method and just deduct the sales tax for the major purchases that you do have receipts for.
