The IRS Deductions Blog

Archive for the ‘Sales Tax Deductions’ Category

Question: Can someone please explain this better for me?

Maybe I’m just slow, but I’ve read this a few times and it’s just not “clicking.”
____________________________________________________

Deduction of state and local sales taxes: The measure allows citizens who do not pay state income taxes to deduct the amount of sales tax they pay over a year from their federal income tax for two additional years. States that benefit include Texas, Nevada, Florida, Washington and Wyoming. The measure would cost taxpayers $3.3 billion.

http://www.cnn.com/2008/POLITICS/10/02/bailout.pork/

Answer: It means that if you live in one of the few states that do not have a state income tax, then you can deuct what what you pay yearly in state sales taxes from your net income, before figuring your Federal Income tax.
Example: Net Income =$50,000,000.00
State Sales Tax Paid= $500.00

50,000,000.00 – 500.00=49,000,500.00

So you would only have to pay Federal Income Tax on $49.000.500.00.

You’d’ probably save about $45.00.00 in taxes. Whooopie!

It’s one of those deals that sound a whole lot better than they actually are.

Good Luck

Items on Amazon Right Now for Sales Tax Deduction Federal Taxes:

Debt & Taxes: Will America Grow Up?

Two new proposals to get serious about the deficit collide with the same old politics, say Peter Coy and Heidi Przybyla

#128 – Ask A Reformed Socialist – Wrecking American Culture – Federal Sales Taxes

Question: Real estate taxes, where to claim?

I’m using a tax prep software and during the process I’m asked to list the taxes I paid per the tax form mailed to me by my mortgage company. I don’t pay taxes by way of my mortgage, rather I have the money put aside to earn interest and then pay the taxes myself every 6 months when they are due.

The software and tax form asks the amount of taxes paid based on box number whatever of this tax form I got from the mortgage company, but as I stated, that box is empty. How do I claim these taxes on my tax return? If I list them in this box entry and yet the IRS sees that entry as zero or empty, won’t that throw up a red flag and possibly generate an audit?

Do I simply enter these taxes under the “sales taxes paid” deduction?

Answer: Even though you had your property taxes escrowed, you should still have the info of what was actually paid for your real estate taxes in 2008. Look on the mortgage interest 1098 form you received from your lender, or consult your local county tax collector to confirm the amount paid for last year.

Even if you do not have enough deductions to itemize, starting in 2008 the IRS will allow you to claim the standard deduction plus $500 property tax credit for individuals and up to $1000 property tax credit for married filling jointly couples.

Do not put this under sales tax. And don’t be concerned if the info isn’t on the 1098 your lender reports to the IRS – impounding/escrowing real estate taxes is a common practice.

Items on Amazon Right Now for Sales Tax Deduction On Tax Return:

Cropper(James) PLC – Half Yearly Report

Cropper(James) PLC – Half Yearly Report

eFile Use Tax Tutorial

Question: Would you be in favor of individuals and businesses paying one flat tax with no deductions? ?

This would be payable to the Federal Government. They would give each state and local government a percentage.This would eliminate all other taxes including local, state and sales.

Answer: One needs the details. At 15.3%, the FICA tax takes in almost as much as income tax. So, 15.3% FICA plus about 15-16 “income” tax. We’re talking about 30+% minimum.

I believe the states have a constitutional right to raise their own taxes, so this couldn’t affect state tax.

Still, at that, 30+% tax, there will be some winners (high income earners) and some losers (the poor, big time). Perhaps something like the earned income credit, to refund some of the tax to the low income workers?

Need more details.

Items on Amazon Right Now for Federal Tax Deduction Sales Tax:

Student’s tax claim upheld by High Court

Hundreds of thousands of youth allowance recipients will be able to claim their education costs as Tax Deductions as a result of a landmark High Court judgement delivered today in Canberra.

Tax Credit Vinyl replacement windows hartford connecticut contact@finestrarossa.com 860-986-7277

Items on Amazon Right Now for 2008 Sales Tax Deduction Table:

Gap Inc. Updates Investors on Strategic Plan for the Next Three to Five Years

Gap Inc. , one of the world’s largest specialty retailers, today updated investors on the company’s initiatives to increase its share of the $1.4 trillion global apparel market, through a combination of international and online expansion and improvements in the North American business.

Bipartisan Fiscal Commission

Items on Amazon Right Now for Federal Sales Tax Deduction Calculator:

Tax Wars

Washington is bracing for a historic battle over U.S. tax law. Here’s what you should do now.

Recovery: Tax Filing Season 2010 – January 2010