How to Write Off Sales Tax

To claim any itemized deductions, you must file using Form 1040.

The Internal Revenue Service permits state and local sales taxes to be deducted from your federal income taxes. The deduction offers an alternative to the state and local sales tax deduction, which cannot be claimed by individuals who live in a state that does not charge income tax. Taxpayers can claim only either the income tax deduction or the sales tax deduction. In to claim the deduction, you must itemize your deductions using Schedule A.

Things You'll Need

• Schedule A
• Schedule A instructions

Instructions

1. Add up the sales taxes you paid throughout the year using your receipts. This method usually results in a higher deduction if you have saved your receipts and you have one or more large-ticket purchases for the year that you paid sales taxes on.

2. Find the amount the IRS allows you to deduct based on the sales tax deduction tables found in the Schedule A instructions. The standardized amount changes based on your income and exemptions claimed.

3. Claim the larger of the two deduction amounts by writing the amount on line 5 of Schedule A. This amount will be added to your other itemized deductions and used to decrease your taxable income.

4. Check box 5b, "General sales tax," to indicate you claim the sales tax deduction rather than the income tax deduction.

References

• IRS: Schedule A Instructions

Resources

• IRS: Schedule A