sales tax
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BillGirolamo
New Member

sales tax

can i deduct sales tax on a new car

2 Replies
JotikaT2
Employee Tax Expert

sales tax

It depends.

 

If you are able to itemize deductions and if your sales taxes are higher than your state income taxes, you could potentially take a deduction for the sales taxes.

 

You can make this change in the federal section of the program.

  1. Select Deductions & Credits
  2. Scroll down to All Tax Breaks 
  3. Select the section titled Estimates and Other Taxes Paid
  4. Select Sales Tax
  5. The first screen titled Let's Compare Your Sales Tax and Income Tax will give you the recommendation from TurboTax, but you can select to try the other deduction
  6. Continue to enter your information as prompted. 
  7. You will eventually reach the screen as shown in the sample below titled We've Chosen a Deduction for You.  

Sales tax deduction

 

Sales taxes versus state income taxes

 

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Hal_Al
Level 15

sales tax

Yes, technically.  But probably not  practically.

 

You are allowed to deduct state & local income taxes OR sales tax; but not both. This provision was added primarily to allow a deduction for people in states without income tax. Sometimes, with a big purchase (like a car), you may be better off deducting sales tax even if your state has an income tax. Enter both, under deductions, and  TurboTax (TT) will calculate the best option. If you don't have all your receipts (and hardly anybody does), you are allowed to use tables (built into TT from IRS Pub 600) based on income & exemptions, You can then add major purchase sales tax to the table amounts. Neither is deductible if you use the standard deduction instead of itemizing.

In TurboTax, enter at:

Federal Taxes Tab (Personal for H&B version)

Deductions & Credits

-Scroll down to:

--Estimates & other taxes paid

   -Sales tax

 

Sales tax (and state & local income tax) are itemized deductions.  To get any benefit, the total of all your itemized deductions must exceed your standard deduction ($12,200 Single, $24,400 Married filing jointly)

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