I purchased a car in 2024 and also had a trade in. I received an IL Form ST-556 for the sales tax. Do I need to report anything about this purchase on my tax return?

[xmasbaby0]

If you are itemizing deductions and want to enter the sales tax paid for the car, you can do that.  Unless you have enough other itemized deductions like mortgage interest, charity donations or medical expenses, entering the sales tax will have no effect on your tax due or refund.

[xmasbaby0]

SALES TAX

You can enter the sales tax you paid for the car you purchased in 2024 by going to Federal>Deductions and Credits>Estimates and Other Taxes Paid> Sales Tax.  You will be asked if you paid sales tax on a major purchase, and you will be able to enter the sales tax you paid for your new vehicle. 

Sales tax is an itemized deduction.  Unless you have enough other itemized deductions to exceed your standard deduction the sales tax will have no effect on your tax due or refund.

“Major purchases” that you can enter for the sales tax deduction include:

Motor Vehicles (cars, trucks, motor homes, RV’s, sport utility vehicles and off-road vehicles

Aircraft or boats

Mobile homes

Manufactured housing

Building materials for major home improvements

You cannot deduct: furniture, jewelry, home electronics such as TV’s or computers

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 tax laws that have been in effect since 2018, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

The standard deduction makes some of your income “tax free.”  It is not a refund.  You will see your standard or itemized deduction amount on line 12 of your 2024 Form 1040.

2024 STANDARD DEDUCTION AMOUNTS

SINGLE $14,600    (65 or older/legally blind + $1950)

MARRIED FILING SEPARATELY            $14,600    (65 or older/legally blind + $1550)

MARRIED FILING JOINTLY $29,200    (65 or older/legally blind + $1550)

HEAD OF HOUSEHOLD $21,900    (65 or older/legally blind + $1950)

[KrisD15]

You could elect to use State Sales Tax paid rather than State Income Tax paid if you Itemize Deductions. 

If you use the Standard Deductions, the sales tax paid does not matter. 

If you use State Income Tax paid, the sales tax paid does not matter. 

The Sales Tax paid is entered under

Deductions & Credits

 Estimates and Other Taxes Paid

    Sales Tax 

@jtenbensel