Claiming Sales Tax on your taxes

[Drake3287]

Like most of us, I simply use the government sales tax tables when claiming sales tax on my yearly taxes. But recently I purchased an expensive new truck where I paid $6,500. in California sales tax alone. This $6,500. plus what ever else I actually pay throughout the year in sales tax must be well over $10,000.

Has anyone actually kept track of sales tax receipts and claimed the actual amount instead of what the government credits you with?

Because I charge everything by credit card for the cash rewards, I save all my monthly receipts anyway. Just wondering what my total might be if I kept a running total of my 2024 sales taxes. Just a pain saving all the receipts though.

 

[Midpack]

Like most of us, I simply use the government sales tax tables when claiming sales tax on my yearly taxes. But recently I purchased an expensive new truck where I paid $6,500. in California sales tax alone. This $6,500. plus what ever else I actually pay throughout the year in sales tax must be well over $10,000.

Has anyone actually kept track of sales tax receipts and claimed the actual amount instead of what the government credits you with?

Because I charge everything by credit card for the cash rewards, I save all my monthly receipts anyway. Just wondering what my total might be if I kept a running total of my 2024 sales taxes. Just a pain saving all the receipts though.

I did one year, when we bought a boat, and that sales tax alone was worth deducting. Like you DW keeps all our CC receipts, so we summarized all those sales taxes on a spreadsheet so we’d have a printed summary. It wasn’t fun, but I’m all about legally minimizing our taxes paid so I was willing that year.

 

[gauss]

FWIW the IRS allows you to claim the sales tax on certain large purchases (aka specified items) IN ADDITION TO the value from the tables for everything else.

As such, I don't see a value in keeping track of the small individual receipts in most cases.

Here is a reference form the Schedule A Instructions:

Optional Sales Tax Tables
Instead of using your actual expenses, you can use the 2023 Optional State Sales Tax Table and the 2023 Optional Local Sales Tax Tables at the end of these instructions to figure your state and local general sales tax deduction. You may also be able to add the state and local general sales taxes paid on certain specified items.

Note that you can also include the sales tax paid over the lease of a vehicle also that is included in the monthly payments in addition to the down payment.

Further details are in the instructions for line 7 of the worksheet.




-gauss

 

[DrRoy]

I haven't itemized since the mortgage was paid off.

 

[jebmke]

FWIW the IRS allows you to claim the sales tax on certain large purchases (aka specified items) IN ADDITION TO the value from the tables for everything else.

As such, I don't see a value in keeping track of the small individual receipts in most cases.

Here is a reference form the Schedule A Instructions:


Note that you can also include the sales tax paid over the lease of a vehicle also that is included in the monthly payments in addition to the down payment.

Further details are in the instructions for line 7 of the worksheet.




-gauss

You can also adjust your income used for the standard calculation to include certain non-taxed items that don't appear on your tax return like a life-insurance payout. In unusual cases these adjustments can make the difference between taking the sales tax deduction vs. income tax.

 

[audreyh1]

Only when I bought a new vehicle and I was able to itemize. As far as I remember the vehicle sales tax was added to the general sales tax amount computed for you. Later version was limited to $10K when combined with property taxes.

Only one time have we itemized since the SALT limitations when we had a large charitable deduction so we piled several other things on.

 

[rk911]

...Has anyone actually kept track of sales tax receipts and claimed the actual amount instead of what the government credits you with?...

I do. I use Quicken to track not just banking but CC and debit card purchases. On each purchase (other than gas) I assign the total sales tax to a separate expense account. At the end of the year I just run a report to get the total sales tax paid.

For gasoline I track each purchase in a different database including the number of gallons bought and total amount spent. Since 2021 all of our gas purchases have been in our state. State sales tax is 6.25% p/g statewide. So total spent * 6.25% = total sales tax paid on gas.

For the last several years the total sales tax we paid was > than the IRS estimate, not by a lot but it was more. In 2023 we bought a new Jeep Wrangler with $3000+ sales tax.

Unfortunately, in 2023 the total of our sales tax, property tax and state income taxes were greater than the max allowable tax deduction ($10k) so we had to settle for the $10K deduction.

 

[Drake3287]

Thanks for the comments. Gives me something to think about for taxes next year.

 

[scrabbler1]

When I bought my current car new back in 2007, I went through the exercise of figuring out if I should use sales taxes versus state income taxes when I itemized that year. I ended up continuing to use state income taxes.

 

[tulak]

FWIW the IRS allows you to claim the sales tax on certain large purchases (aka specified items) IN ADDITION TO the value from the tables for everything else.

+1

I did this for the mini-splits I had installed last year.

I would be curious to know how close the tables are to what I actually pay in sales tax, but I'm not up for that level of tracking.

I haven't itemized since the mortgage was paid off.

And one reason I'm not in a hurry to pay off my mortgage. It lets me easily itemize, saving me over 3k in taxes.

 

[jebmke]

+1

I did this for the mini-splits I had installed last year.

I would be curious to know how close the tables are to what I actually pay in sales tax, but I'm not up for that level of tracking.



And one reason I'm not in a hurry to pay off my mortgage. It lets me easily itemize, saving me over 3k in taxes.

I "get to itemize" and I don't have a mortgage. Instead of sending my money to a mortgage company I get to direct it to other charities of my choice.

 

[gauss]

I "get to itemize" and I don't have a mortgage. Instead of sending my money to a mortgage company I get to direct it to other charities of my choice.

In 2026 (When the provisions of TCJA that changed Standard Deduction and Personal Exemption amounts expire as well as the provisions that limited SALT deductions to 10,000), I hope to itemize and send some appreciated assets to Charity via my Donor Advised Fund at Fidelity Charitable

-gauss