Big Purchase? Deduct Sales Taxes Paid

The IRS previously allowed a sales-tax credit for purchasing a new vehicle, but this law isn’t available for 2011.

However, you may be able to still benefit from a deduction from sales tax in 2011. If you itemize your deductions, you can opt to deduct general state and local taxes paid, instead of deducting state and local income taxes paid. In some states such as Florida and Texas, where there are high state taxes, this can be a great tax benefit. Even if you live in other states, it may still be beneficial if you make large purchases during the year.

It is important to keep receipts for high value transactions to keep record of local and state sales tax paid.

If you purchased a new vehicle in 2011, you may still be able to deduct the sales tax.

Calculating how much to deduct or which deduction to take can be complex. If you chose to deduct sales tax, you are allowed to claim the actual sales taxes paid, or can deduct an amount from a table provided by the IRS.

For assistance consult ABG or your tax professional to determine which deduction you should take.