Do I get my $799 credit for Texas sales tax? The completed form does not show the credit in the "Tax Liability" field, thus causing me to owe money. Now what?

[randy8760]

Before I entered my Texas sales tax information, Turbo Tax showed I owed $38. After I entered my information, Turbo Tax still showed I owed $38. Shouldn't I get credit for the Texas sales tax credit for $799?

[xmasbaby0 · Accepted solution]

Sales tax is an itemized deduction.  It has no effect on your tax due or refund unless you have enough itemized deductions to exceed your standard deduction.

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 new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income.  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2022 Form 1040.

2022 STANDARD DEDUCTION AMOUNTS

SINGLE $12,950  (65 or older + $1750)

MARRIED FILING SEPARATELY $12,950  (65 or older + $1750)

MARRIED FILING JOINTLY $25,900  (65 or older + $1400 per spouse)

HEAD OF HOUSEHOLD  $19,400  (65 or older +$1750)

Legally Blind + $1750

[randy8760]

xmasbaby0,

Thank you so much for your reply. You have answered my question thoroughly and I appreciate your help.