.
Re: Keeping track of Sales Taxes (for deduction)
Why?
We live in a no-income tax state. We don't spend a lot of money, so that the IRS calculation gives us more of a deduction than saving receipts. However, if you buy a car, boat, or other big ticket item, keep that receipt. <--- I am not sure about the tax laws on this anymore, but I think you will not need to keep all those receipts nor add them up if you do unless you love to spend more than the average citizen with your income which would be hard to believe of anybody who takes the trouble to post a question on this forum.
We live in a no-income tax state. We don't spend a lot of money, so that the IRS calculation gives us more of a deduction than saving receipts. However, if you buy a car, boat, or other big ticket item, keep that receipt. <--- I am not sure about the tax laws on this anymore, but I think you will not need to keep all those receipts nor add them up if you do unless you love to spend more than the average citizen with your income which would be hard to believe of anybody who takes the trouble to post a question on this forum.
Re: Keeping track of Sales Taxes (for deduction)
Are you a renter who itemizes? From what I know you get to decide whether to deduct state sales taxes OR property taxes. Maybe my memory is wrong - but it has never made sense to keep track of state sales taxes paid.
For us it's a no-brainer. We'd have to keep track of $75,000 worth of many many taxable purchases each year to equal the one property tax bill we get and pay each December.
Or if it's deducting sales taxes vs. state income tax - still a no brainer. State sales tax burden is way lower than income tax around here.
For us it's a no-brainer. We'd have to keep track of $75,000 worth of many many taxable purchases each year to equal the one property tax bill we get and pay each December.
Or if it's deducting sales taxes vs. state income tax - still a no brainer. State sales tax burden is way lower than income tax around here.
- archbish99
- Posts: 1649
- Joined: Fri Jun 10, 2011 6:02 pm
Re: Keeping track of Sales Taxes (for deduction)
It's the latter, and it vastly depends on the state. For those with low or no income tax, it's a valuable deduction. I agree, though -- the accounting of every single purchase isn't worth the effort in most I, particularly since you're able to tack on the tax of big-ticket purchases that aren't included in the formula.Atilla wrote:Or if it's deducting sales taxes vs. state income tax - still a no brainer. State sales tax burden is way lower than income tax around here.
I'm not a financial advisor, I just play one on the Internet.
Re: Keeping track of Sales Taxes (for deduction)
It is my understanding, and hopefully I am correct, that you can deduct state income tax paid when itemizing deductions on Schedule A. However, there are approximately nine states that do not levy a state income tax and the taxpayer, if itemizing on Schedule A, can deduct state and local sales tax on Schedule A in certain years. However, that deduction has expired and has not yet been approved for tax year 2012.
I live in TN and we do not have a state income tax per se and in the few years that I did itemize and could deduct state and local sales tax, I found it much better to take the amount based on actual receipts rather than the standard amount alloted in the IRS tables. I charge virtually all of my purchases to a credit card, paying it in full each month, and just keep tabs on my monthly batches of receipts as to how much was paid for the state and local sales tax.
I live in TN and we do not have a state income tax per se and in the few years that I did itemize and could deduct state and local sales tax, I found it much better to take the amount based on actual receipts rather than the standard amount alloted in the IRS tables. I charge virtually all of my purchases to a credit card, paying it in full each month, and just keep tabs on my monthly batches of receipts as to how much was paid for the state and local sales tax.
Tom D.
-
- Posts: 941
- Joined: Fri Apr 01, 2011 1:49 pm
Re: Keeping track of Sales Taxes (for deduction)
Although I stopped saving receipts this year, I used to do it (my state has no state income tax, but a large sales tax).
This is what I did:
I had 12 legal size envelopes (one for each month) labeled with "Sales tax, mo/yr)
I saved my receipts in each envelope. At the end of each month, I totaled the amount and wrote it on the envelope. When tax time rolled around, I added up the total of the 12 envelopes.
This is what I did:
I had 12 legal size envelopes (one for each month) labeled with "Sales tax, mo/yr)
I saved my receipts in each envelope. At the end of each month, I totaled the amount and wrote it on the envelope. When tax time rolled around, I added up the total of the 12 envelopes.
Re: Keeping track of Sales Taxes (for deduction)
I use Excel spreadsheets to track my monthly expenses. When they added the sales tax deduction (my state has no income tax), I simply added a column to the spreadsheet and I now enter the sales tax (from the receipt) for tracking. My method has always been to clip the receipts to the credit card statement, and this helps me find an old receipt if we need to take an item back or need the receipt for another purpose. At the end of the year, I place all the receipts (only those with sales tax) into a large folder and I keep this for the require 3 year IRS audit period.
I am not terribly worried about being able to match up receipts to my spreadsheets if I am audited. I will just give the IRS agent the folder along with the 12 monthly spreadsheets and let him waste his time.
Invariably, I am conservative in my sales tax deduction. Every year about May my wife seems to find some old purse with a bunch of old receipts from a year ago....that I could have deducted had I had the receipt. I just throw those newly-found receipts into the folder in case I need it in the audit. If the auditor were to throw out a receipt (for some unkown reason) I can produce a few others that I didn't claim.
We have a fairly high level of expenses, and I find each year that my actual receipts are significantly above the IRS standard amount from the table in the tax forms.
Best wishes.
I am not terribly worried about being able to match up receipts to my spreadsheets if I am audited. I will just give the IRS agent the folder along with the 12 monthly spreadsheets and let him waste his time.
Invariably, I am conservative in my sales tax deduction. Every year about May my wife seems to find some old purse with a bunch of old receipts from a year ago....that I could have deducted had I had the receipt. I just throw those newly-found receipts into the folder in case I need it in the audit. If the auditor were to throw out a receipt (for some unkown reason) I can produce a few others that I didn't claim.
We have a fairly high level of expenses, and I find each year that my actual receipts are significantly above the IRS standard amount from the table in the tax forms.
Best wishes.
Andy
Re: Keeping track of Sales Taxes (for deduction)
Moved, bought a lot of furniture in 2011. Saved receipts in a bag and used a paper and pencil to list them, then a calculator to add them. If the IRS asked, I figured I'd hand them the bag.
JT
JT
Re: Keeping track of Sales Taxes (for deduction)
And they will hand you a bill.bottlecap wrote:Moved, bought a lot of furniture in 2011. Saved receipts in a bag and used a paper and pencil to list them, then a calculator to add them. If the IRS asked, I figured I'd hand them the bag.
JT
I always wanted to be a procrastinator.
-
- Posts: 12073
- Joined: Fri Sep 18, 2009 1:10 am
Re: Keeping track of Sales Taxes (for deduction)
there is no provision for the deduction of state sales taxes on your federal return for 2012. so no need to save receipts.
Re: Keeping track of Sales Taxes (for deduction)
But what about 2013?letsgobobby wrote:there is no provision for the deduction of state sales taxes on your federal return for 2012. so no need to save receipts.
What was the law in 2001 on deducting sales tax?2013 will be the first year that I will need to keep receipts and detailed records for the itemized sales tax deduction.