About General Sales Tax Deductions
According to the IRS as of 2009, if you file a Form 1040 and itemize deductions on Schedule A, you have the option of deducting either state and local income taxes or state and local sales taxes. You cannot deduct both.
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Function
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If you saved all your receipts for purchases during the year, you can add up the total amount of sales taxes you paid and deduct that amount. If you did not save your receipts, you can deduct state and local sales taxes by filling out a worksheet and using the optional general sales tax tables in the Instructions for Schedules A & B (Form 1040).
Who Benefits
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The sales tax deduction is mostly likely to benefit people who live in a state with no income tax, unless you paid more in sales tax than in state income tax.
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Considerations
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When using the general sales tax table, you can add sales tax paid for specified items, including a motor vehicle, an aircraft or boat, a home, or substantial addition to or major renovation of a home.
Features
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To avoid the worksheet, the IRS offers an online sales tax deduction calculator: Find a link in References. You just enter some information, and it tells you how much you can deduct.
Geography
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When using the calculator, the way that the sales tax deduction is determined varies depending on where you live, because the two key features of a general sales tax varies by location. These features are what is taxed (the tax base) and how much it is taxed (the tax rate).
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