I file my taxes in the state of Missouri. I bought a new car in tax year 2021. I believe I can use the sales tax to pay my state taxes. Where can I find this in TurboTax?

[joelmarcia]

 I have the Department of revenue receipt that tells me the exact amount of state tax, which is larger than I have deducted from my paycheck.

[VolvoGirl]

For your Federal return........If you itemize deductions on Schedule A instead of taking the Standard Deduction you can deduct either the state income taxes paid OR the state sales tax.  

But since the Standard Deduction has gone up most people are now taking the Standard Deduction.  AND There is a max 10,000 limit (5,000 MFS) of property tax and state taxes "SALT".  SALT is State And Local Tax.  Which includes property tax, any state tax paid like for last year’s return and includes any state withholding from your W2s and any 1099s you have. And any taxes in W2 box 14 and 19 like SDI or VDI. You can only deduct up to 10,000 (5,000 MFS) for SALT State and Local Taxes.

To Enter Sales Tax, go to

Federal Taxes or Personal (Home&Business)

Deductions and Credits

Then scroll down to Estimates and Other Taxes Paid

Sales Tax- click the Start or Update button

You might see a screen saying

Sales Tax and Income Tax - Click Continue with Sales Tax

Then click on EasyGuide

[xmasbaby0]

You can never use a federal refund to pay a state tax due, so do not expect to pay MO with a refund you may (or may not) get on your federal return.    Sales tax is an itemized deduction, which will have no effect on your federal tax due or federal refund unless you have enough other itemized deductions to exceed your standard deduction.   

SALES TAX

You can enter the sales tax you paid for the car you purchased in 2021 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. “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

https://ttlc.intuit.com/questions/1901222-which-deduction-should-i-choose-sales-tax-or-income-tax

https://ttlc.intuit.com/questions/2566624-how-much-sales-tax-did-i-pay-last-year

https://ttlc.intuit.com/questions/3148443-how-do-you-define-major-purchase-or-major-item-for-the-sal...

https://ttlc.intuit.com/questions/1900791-how-do-i-find-my-local-sales-tax

https://ttlc.intuit.com/questions/2566624-how-much-sales-tax-did-i-pay-last-year

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns.  The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

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 12a of your 2021 Form 1040.

2021 STANDARD DEDUCTION AMOUNTS

SINGLE $12,550  (65 or older + $1700)

MARRIED FILING SEPARATELY $12,550  (65 or older + $1350)

MARRIED FILING JOINTLY $25,100  (65 or older + $1350 per spouse)

HEAD OF HOUSEHOLD  $18,800  (65 or older +$1700)

Legally Blind + $1350

[xmasbaby0]

@joelmarcia

Your state tax due cannot be paid from your federal refund. 

It is not possible to pay your state tax due from your federal refund, nor is it possible to pay a federal tax due from a state refund.  The federal and state treasuries are completely separate from each other.  You may have seen a TurboTax summary of your federal and state amounts that confused you into thinking one was “paying” the other.  It is not. The ONLY thing you can pay for from a federal refund is your TurboTax fees if you chose that option.  

You must pay your state tax due using the state’s preferred method of receiving payment.  For most states that will be by making a payment to the state’s own tax website, or by mailing a check or money order.

https://ttlc.intuit.com/questions/1900884-what-are-my-options-for-getting-my-state-refund-or-for-pay...

https://ttlc.intuit.com/questions/1901670-how-do-i-contact-my-state-department-of-revenue

[Opus 17]

Your question confuses at least two topics.

1. You can’t pay your state taxes from your federal refund.  

2. You can’t use state sales tax to offset your federal income tax bill.

3. What you can do is used state tax as an itemized tax deduction on schedule A of your federal return. If your total itemized deductions are larger than your standard deduction, that will reduce your taxable income and you will pay less tax overall, but it is not a direct dollar for dollar credit.

When calculating what amount of state tax to deduct on your federal return, you can either use state income tax that you paid or state sales tax that you paid.  When using the sales tax deduction, you can either use actual tax that you paid from your receipts, or you can use a Standard estimate that the IRS calculates based on your income and local tax rate. When using the standard IRS amount of sales tax, you can increase that by the amount of sales tax you paid for the purchase of a vehicle.

When you prepare your tax return in TurboTax, simply go through the program and list all of your deductions. TurboTax will tell you whether it is better to use the standard deduction, the state income tax deduction, or the state sales tax deduction.

[joelmarcia]

I appreciate your tips, and I shall deduct my state taxes from my federal taxes.

However, you didn't answer my primary question, which I stated poorly, can I use the state tax on my car to offset my Missouri state taxes? If so, where do I put the $1756 that I paid in state tax in TurboTax? 

[Opus 17]

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@joelmarcia wrote:

I appreciate your tips, and I shall deduct my state taxes from my federal taxes.

However, you didn't answer my primary question, which I stated poorly, can I use the state tax on my car to offset my Missouri state taxes? If so, where do I put the $1756 that I paid in state tax in TurboTax? 

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Most of the time, states don't allow a deduction for their own state taxes.  If you think about it, it's a circular logic problem -- you pay tax to Missouri, which reduces the tax you owe to Missouri.

I checked form MO-A and if you do deduct your state and local taxes on your federal return, that gets taken out when you do your state tax return. 

[joelmarcia]

I don't see it as a circular reason. I've paid $600 in taxes for my income. I placed it on my W-2 form, so it would take it off my federal taxes. Separately, I have paid Missouri state taxes for my car that amount to $1756 and educational local tax of the amount of $1460 for a total of $3254.

I'm talking about my state taxes which are 1040 MO A. Can I offset any balance for Missouri state taxes?

[joelmarcia]

Do you mean that Ice should put on my W2 all of my state and local taxes? That doesn't seem correct.

[xmasbaby0]

@joelmarcia It sounds like you are very confused.   You need to re-read the replies you have already gotten in this thread.    You seem to have the mistaken idea that the IRS will pay the tax you owe to MO because you paid sales tax in MO when you purchased a car.  That is not going to happen.

If you owe tax due to MO---as shown on your MO tax return---then you either have to write a check to MO, get a money order and mail it to MO, or pay MO by using a credit or debit card on the MO tax website.   The IRS is not paying MO for you.   

As to whether you are getting a federal tax refund--look on your federal Form 1040.   If you are getting a federal refund the refund is on line 35a.    That refund will go to you---either to your mailing address or to your bank account if you chose direct deposit for your refund.   The IRS will not send your federal refund to MO to pay whatever you owe to MO.

When you prepare your tax return you have to enter all of the information from your W-2 exactly as it appears.   The federal tax that was withheld by your employer is shown in box 2.   The MO state tax withheld by your employer is shown in box 17.    You do not change anything about the way you enter that information.   The information on your W-2 has nothing to do with the sales tax you paid for a car.

Do you have any other itemized deductions to enter like mortgage interest or property taxes you paid?   If you do not have such things to enter, then, sorry but the amount you paid in sales tax to MO when you bought the car has no effect at all on your tax refund.   You will not get a refund for the sales tax from the IRS or from MO.    

Please re-read the replies above that explain in more detail how using itemized deductions on your federal tax return works.   If you do not have enough itemized deductions then you will simply get your standard deduction instead.  If you get your standard deduction, then that sales tax for the car does not change anything for you.

[VolvoGirl]

The state tax on your car is not an income tax.  You can not apply it to your tax due.  It is a Sales Tax.  Different kind of tax.   The $600 tax on your W2 was probably in box 2?  That is federal income tax withholding.  It is just an estimate of the tax you will owe on your total income when you fill out your tax return at the end of the year.  That's why you file a tax return to see if you had too much withholding taken out of your paychecks and get a refund or owe more tax.

Any state withholding will be on W2 box 17.  

[Opus 17]

@joelmarcia 

A tax deduction reduces your taxable income on which the tax you owe is calculated.  The federal government allows you to deduct state taxes that you pay, if you itemize your deductions. That reduces your federal taxable income because your income was reduced because of paying state taxes.

Some states allow you to deduct federal taxes for the purpose of calculating state income tax. In other words, because your state taxable income is reduced because you had to pay federal taxes, your state tax calculation does not include the money you already sent to the federal government.

No state allows you to deduct state taxes paid from your income used to calculate state taxes owed.

Your state has decided that it will tax your income from working in a certain way, and it will tax your property in a certain way, and it will tax purchases you make in a certain way. The fact that you also pay tax on your purchases does not reduce the tax you pay on your income. That’s just how the state law tax is you, and if you don’t like it, you need to talk to your state legislature.

And sure, it means you pay taxes twice on some of the same money. That’s life in America.

[joelmarcia]

 I have been led astray by thinking that sales tax would replace/ taken instead of the income tax due. I was sorely misinformed buy a car salesman. That is the price of the living in America. Fortunately, I was not scammed by a Nigerian prince!

[Opus 17]

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@joelmarcia wrote:

 I have been led astray by thinking that sales tax would replace/ taken instead of the income tax due. I was sorely misinformed buy a car salesman. That is the price of the living in America. Fortunately, I was not scammed by a Nigerian prince!

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Hopefully you got a decent car.  Unfortunately, paying sales tax on your car doesn't reduce your income tax. 

Cheers.