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IRS Rules on Sales Tax

The Internal Revenue Service provides individuals the opportunity to claim state and local sales tax while itemizing deductions instead of claiming state and local income tax. Awareness of the specific requirements for claiming sales tax is essential to filing a claim with itemized deductions and either maximizing your income tax return or minimizing payments.

Basic Rules

To claim state and local sales tax, you must file a Form 1040 and itemize deductions on Schedule A. The IRS specifies that you cannot claim both state and local income tax and state and local sales tax. You must determine which of the two options will prove most beneficial to you and pursue that claim.

Rules for Determining Claim

If you choose to claim state and local sales tax, you have a few options in terms of calculating the total of your deduction. If you have saved your receipts over the course of the year, you are allowed to add the amount of sales tax you paid, based on the receipts you possess. If you do so, according to the IRS, you must have "actual receipts showing general sales taxes paid." Individuals who have not saved receipts can use either the the Sales Tax Deduction Calculator on the IRS website or the Form 1040 Schedule A Line 5b Worksheet to calculate estimated sales tax paid based on income and the tax rate for the state and local region.

Rules on General Tax

Sales taxes paid are all calculated at the state and local general rate, and deductions must be calculated accordingly. This procedure holds true even for taxes on items taxed at a rate less than the general sales tax rate. Such items may include food, medical supplies, motor vehicles and clothing. Items taxed at a higher rate, including motor vehicles in some regions, are also deductible only at the general state and local tax rate.

Additional Rules

According to the IRS, taxes paid on items purchased for use in business or trade are not eligible for inclusion in your sales tax deduction. In addition, you are not eligible to deduct new vehicle taxes on Line 7 of Schedule A of Form 1040 if you decide to claim state and local sales tax.

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