How to Reclaim Sales Tax
Sales tax you had to pay that was not collected from the buyer is a deductible expense on your business income taxes. Sales tax that was paid for items used in your business such as tax on office supplies and equipment are not deducted as an actual tax expense but they are included in the cost of the items that you would deduct as an office expense.
Nonbusiness sales taxes may be deducted on IRS Form 1040, Schedule A, if you are itemizing your deductions rather than using the standard deduction amount.
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Instructions
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Determine the amount of sales tax for your state according to the charts in the Form 1040 instruction booklet.
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Find your state in the columns. Look to the far left of the page and determine your income level.
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Follow the column over to your state and choose the correct number of exemptions. Use the dollar amount listed in that column as the figure for question 1 of the state and local sales tax deduction worksheet.
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Complete question 2 of the work sheet by determining your local sales tax amount using the table on page A-14 of the 1040 instruction booklet or enter "0" according to the instructions for line 1.
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Complete question 3 by indicating your local general sales tax. If you do not know the general sales tax rate for your locality, you must obtain it in order to complete the form. Your state government website should have this information.
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Answer question 4 by either indicating "no" or answer "yes" and enter the decimal equivalent of your state general sales tax rate.
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Answer question 5 if you answered "yes" to question 4. Follow the instructions and divide the figure on line 3 by the figure on line 4. Round this figure to a 3-digit decimal.
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Answer question 6 by indicating "no" if you answered "0" on question 2. If you answered "yes" on question 2, multiply the dollar figure on line 1 by 3. If your answer to question 6 is "yes," multiply the dollar amount on line 1 by 5.
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Answer question 7 by entering any state and local taxes that were paid on specified items such as aircraft, boats, a home or a vehicle, as long as the tax rate was the same as the general sales tax rate. If the tax rate was higher you will only enter the amount that you would have paid at the general sales tax rate.
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Add lines 1, 6 and 7 and enter the amount on line 8. Calculate the total of all your general sales tax deduction worksheets if you have more than one. If you lived in more than one state you should do a worksheet for each one to calculate the total amount of the deduction.
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