I bought a car from a private seller for 6000$ and paid a very small amount as a use tax at the DMV. But now I'm getting a Sales Tax deduction of 2417$?? help :)

[rjs]

Your sales tax deduction is the amount from the IRS sales tax table plus the tax you paid on the car. The amount from the sales tax table depends on what state you are in, your income, and your family size.

[arvind-doraiswam]

Thank You for your reply. I'm just a little concerned I've done something wrong. This is not a new car, I only paid 6000$ but am getting back 2417$ of it as a sales tax credit, even though I paid no sales tax (apart from some small amount at the DMV).

Does the fact that it is a used car not count?

[rjs · Accepted solution]

The $2,417 is not for the car. Most of it is from the sales tax table. You pay sales tax on almost everything you buy. The sales tax table allows you to deduct an average amount of sales tax for someone with your income and family size. If you provide the following information I can try to figure out how much the sales tax table allows you to deduct.

• What state do you live in?
• What is your total income for the year (Form 1040 line 11 plus nontaxable income such as tax-exempt interest and the nontaxable portion of Social Security)?
• Are you filing a joint tax return with your spouse?
• How many dependents are you claiming?
• How much tax did you pay to the DMV?
• Do you live in a place that has local (county or city) sales tax in addition to the state sales tax? If so, what is the total sales tax rate, including state and local sales tax?

[arvind-doraiswam]

Thanks - I think that makes sense and sorry for the delay, I got busy yesterday. Is this the sales tax table you speak about - https://apps.irs.gov/app/stdc/stdc.html?

That works out to a bit less than what Turbo Tax calculated but I guess that depends on the exact amount?

[rjs · Accepted solution]

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@arvind-doraiswam wrote:

Is this the sales tax table you speak about - https://apps.irs.gov/app/stdc/stdc.html?

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The link that you posted doesn't work because you copied it after you had started going through the calculator, but yes, that's the IRS sales tax table. The tables are also in the IRS Instructions for Schedule A, starting on page 14. Here's the link for the start of the Sales Tax Deduction Calculator on the IRS web site.

https://www.irs.gov/credits-deductions/individuals/sales-tax-deduction-calculator

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@arvind-doraiswam wrote:

That works out to a bit less than what Turbo Tax calculated

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Remember that the deduction that TurboTax calculates is the amount from the IRS table plus the amount that you entered for the car.

[arvind-doraiswam]

Ah that all ties in then - thank you so much and that makes sense. This is a flat rate that I get then; the other alternative would be to keep all the receipts etc etc over the year which sounds very tedious 🙂 but could earn me more, who knows?

Is that understanding right?

[rjs]

Yes, that's right.

Adding up the sales tax on all your receipts for the year could come out to more that what the IRS table gives you, but it could also come out to less, in which case the effort is wasted.