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mcaveyandrew
New Member

I purchased a car and an engagement ring totalling a combined 19,000. Should I itemize or still take the standard deduction?

I'm trying to figure out if itemizing is worth it for me
4 Replies
Mike9241
Level 15

I purchased a car and an engagement ring totalling a combined 19,000. Should I itemize or still take the standard deduction?

for federal income tax purposes you can take a deduction on schedule a for either state income, taxes or sales taxes.  taxes that are deductible in addition would be personal property taxes and real estate taxes foreign tax credit if you don't take it as a credit.   however, the deduction for all taxes on schedule A is limited to $10,000 ($5,000 if married filing separate)    to benefit from itemizing the total of your itemized deductions would have to exceed your standard deduction.  the standard deduction for 2020 is $12,400 if single double that if filing jointly. the purchases themselves are not tax deductible  except maybe the car if you are self-employed. 

JamesG1
Expert Alumni

I purchased a car and an engagement ring totalling a combined 19,000. Should I itemize or still take the standard deduction?

Enter into the TurboTax software your income and all the deductions and credits that you qualify for.  After you have entered all your itemized deductions, TurboTax will choose which option gives you the best deduction.  Either:

  • Standard deduction, or
  • Itemized deductions on Schedule A.

Most 2020 Federal tax filers will be better off using the standard deduction over itemized deductions.

 

This article explains how to compare between one option or the other.

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Opus 17
Level 15

I purchased a car and an engagement ring totalling a combined 19,000. Should I itemize or still take the standard deduction?

Your question has several layers, you may not realize or you are not clear on.

 

If you itemize, one of the things you can deduct is "state and local taxes" -- up to a maximum of $10,000.

 

"State and local taxes" includes:

a) income tax OR sales tax

b) plus real estate taxes

c) plus personal property taxes.

 

If you deduct state income tax, you can't deduct state sales tax.  If you deduct sales tax, you can't deduct state income tax.  

 

If you choose to deduct state sales tax, you can deduct the sales tax you actually paid, if you kept records, or you can deduct the "standard amount" which is an estimate provided by the IRS based on your state and your income.  If you use the standard amount method, you can add tax you paid for the purchase of a vehicle, aircraft, or home, but not other purchases, even if they are large purchases.

 

Whether or not you should deduct sales tax or income tax, or itemize at all, depends on your total facts and circumstances.  If you enter all your deductions into Turbotax, the program will choose the best option for you.  If you choose to deduct sales tax and use the standard method, you can add on top the car sales tax but not the tax on the ring. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
BigRedNole
Level 2

I purchased a car and an engagement ring totalling a combined 19,000. Should I itemize or still take the standard deduction?

Just for the sake of income, it is extremely difficult now to itemize over the standard deduction for 90% of tax filers. A car nor an engagement ring are deductible. Those are discretionary expenses that would have little bearing on taxes. 

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