Sales tax among frequently missed tax deductions | Rogersville
A sales tax deduction is one of the frequently missed deductions for states that do not impose income tax.
States with no income tax include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
There are two ways to claim the state sales tax deduction on your return.
You can keep your receipts and deduct any sales taxes you paid throughout the year.
The easiest option for claiming the sales tax deduction is to use the IRS Sales Tax Calculator. Additionally, you can deduct any sales tax paid for a car, motorcycle, boat, RV, or airplane. If you use the vehicle for your business, sales tax cannot be deducted on Schedule A. Sales tax on building materials can also be deducted.
If you are building a new home, the sales tax paid on building materials can be significant. However, the maximum tax deduction, including property taxes, is $10,000. When building a new home, your sales tax deduction will be much higher than the average deduction if you claim your sales tax.
Relatively high numbers on a tax return may result in an audit. If you are claiming sales tax when building your home, it is essential to keep all of your receipts. In the event of an audit, you will need to provide copies of receipts. Receipts often fade over time, so it’s a good idea to make copies of receipts before they fade and become unreadable.
Personal charitable contributions are another often-missed deduction. It’s easy to remember the significant charitable donations you’ve made throughout the year. However, the little things add up and can make a difference in your return. The cost of office supplies and postage used for a nonprofit organization is deductible. Food ingredients you prepare for non-profit organizations are also deductible. If you drove your car for charity, the mileage is deductible.
The Earned Income Tax Credit (EITC) is available to millions of people. However, according to the IRS, 25% of eligible people do not claim it. Tens of millions of credit-eligible individuals and families who are considered middle class. The new 2021 tax law allows many more individuals to claim the credit. Previously, only people without children between the ages of 25 and 64 were eligible for the EITC. The age limits for people without children have been changed to include people over the age of 18. Therefore, many seniors will be eligible for the EITC.
If you have already filed your return, you can amend your return to claim the missed deductions.
David Zubler is a tax accountant and registered agent in East Tennessee, providing tax strategies and representing clients before the IRS and has over 25 years of tax experience. David can be reached at (865) 363-3019 or by email at [email protected]