The American Jobs Creation Bill (2004) gives individual taxpayers who file itemized deductions (Schedule A) on their federal tax return two options: 1) to deduct their state and local sales tax or 2) to deduct their state income taxes on their 2004 tax return.
For those living in the states that currently have no state income taxes (Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming) the choice is simple and they should opt for the sales tax option. Anyone living in the other 43 states, however, will have to take the time to decide which of the two options is most beneficial in saving them money on their taxes.
For simplicity sake, most taxpayers will likely opt for the sales tax tables provided by the government this year since they are unlikely to have the receipts to support a claim of how much they actually paid in sales tax. The IRS has created standard sales tax tables that give taxpayers a specific dollar amount of sales tax that can be deducted for each state depending on the taxpayer's income and number of dependants. Here are the state sales tax deduction tables for each state provided by the IRS:
Alaska Sales Tax Deduction Table: There is no table for Alaska. If you live in Alaska and paid any local sales taxes, you must use your actual expenses to figure your sales tax deduction.
Home
Forums
Newsletter