2007 Tax Tip: State Sales Tax Deduction

[BryanS]

The 2007 tax year is the last year that residents of states that have sales tax, but no income tax, can take that deduction on their Schedule A. This little tax break has been around for two or three years, but many people do not take it. You can only take this deduction if you itemize. You DO NOT have to have records of all your receipts (if you saved all of them, you can use them as your basis for this deduction, for qualified purchases... but if you don't have them, then you can take a pre-determined deduction, based on your adjusted gross income).

Use this link and it will tell you how much you can deduct:

http://apps.irs.gov/app/stdc/stdc.html?_page=11&_cancel

Once you run through this little tool... "enter the general sales tax deduction on Schedule A, line 5. Be sure to check box b on that line." It appears to be that easy.

Background:

http://www.bankrate.com/brm/itax/20041012b1.asp