If I use the table that IRS provides to calculate the deduction the answer comes out way lower than reality. I suspect they do this to minimize the deduction most people take and thus maximize the income tax paid.
The alternative that is commonly stated is you have to keep every receipt for every purchase made for the entire year and add up all the sales tax actually paid. I suspect no one does that and thus they use the table which doesn't seem to give them an accurate deduction.
If you know the total amount of money you spent last each year, from bank statement for example, you can multiply that by the sales tax percentage and arrive at the amount you actually paid. Will the IRS accept this more accurate approach than using the table they provide?
You'll need to sign in or create an account to connect with an expert.
If you use the IRS table to figure what they say you paid in sales tax it shows they assume you spent very little on things taxed. Apparently the table is developed for the average 30's, 40's year old family that has a non-taxed mortgage and is saving a lot of money for retirement and college. However, this does not match the profile of a retired person that has already done all that and has more money than they need and no mortgage. Thus they spend practically every dollar of income and those are subject to sales tax. For people in that category the IRS table is a rip off as it doesn't come close to estimating your real state and local sales tax paid.
1) for people who work, state withholding is greater than sales tax so it doesn't help.
2) most people can't itemize any more so it doesn't matter.
you can deduct all sales tax for which you have receipts.
most persons toss the receipts for small amounts.
However, put down your actual sales tax, if you know it. An audit over that is extremely unlikely.
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
hcgma2020
Level 2
salon7inc
New Member
zbchristy501
Returning Member
eztax7749
New Member
Angel62
Returning Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.