I have been saving receipts all year long to see if my sales tax paid exceeds my state income tax paid. If my sales tax paid is greater than my state income tax paid, I will use it for my deduction on my tax return. I asked my accountant about it to make sure I could do this, and he said I have to use the IRS tables to compute my sales tax paid, and that I can not use "Actual" sales tax paid based on my receipts. Is he correct, or should I continue to save all of my receipts?
Illinois - State & Local Sales Tax Deduction
Oct 17, 2005
1 Replies
"Biros" wrote
You can use actual tax paid.
IRS-PUB, 2004, IRS Publication No. 600, INTRODUCTION Publication No. 600: INTRODUCTION
New for 2004, you can elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040). You cannot deduct both. Generally, to figure your state and local general sales tax deduction, you can use either your actual expenses or the Optional State Sales Tax Tables contained in this publication.
Actual expenses Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2004 only if the tax rate was the same as the general sales tax rate. Do not include sales taxes paid on items used in your trade or business.
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