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Deducting sales tax improves income tax returns
Taxpayers can now choose to deduct state and local general sales taxes from their federal income tax thanks to the American Jobs Creation Act, signed by President Bush in October.
For 2004 and 2005 taxes, taxpayers can deduct state and local general sales taxes as an itemized deduction on a Form 1040, Schedule A. But to claim the deductions, the return must be itemized.
The key to the whole thing is you have to itemize, if you dont itemize its no use to you, said John Steller, senior tax advisor at H&R Block in Silverdale.
When itemizing deductions, taxpayers can deduct a portion of medical and dental expenses, un-reimbursed employee business expenses, charitable contributions, amounts paid for certain taxes, interest, real estate taxes, personal property taxes and miscellaneous expenses. Taxpayers may also deduct certain casualty and theft losses. Sales taxes paid on cars, trucks, vans, motorcycles, motor homes, recreational vehicles, sport utility vehicles