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  • Sales Tax deduction

    I've moved to a no income/high(ish) sales tax state and I itemize.  Does anyone have any experience or advice regarding the state sales tax deduction on federal income tax? Seems like saving all my family's receipts all year would be painful for the reward. I know there is a standard formula from the IRS; but since we are still living like residents, it might be erroneous in my favor... could that come back to bite me?

    Anyone have any app recommendations for keeping track/automating this process for 2016?

    Thanks in advance, and love the new forum WCI!!!

    E

  • #2
    I don't know of an App, but this is my first year itemizing. I'm taking pictures of all my receipts and then putting the tax info into a spreadsheet. Photos go into a Google Drive folder organized by month in case of an audit.

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    • #3
      Expensify is an awesome app- automatically reads receipts and saves a photo. Free and highly recommend for this. Also use it to log milage for driving related to work.

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      • #4
        I am probably going to just use the standard formula for 3 reasons:

        1) Simplicity

        2) I am a low spender

        3) Less chance of an audit

         

        But I have yet to itemize so maybe I'll think differently once my finance geekiness takes over.

        Already started playing with this calculator...

        https://apps.irs.gov/app/stdc/

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        • #5
          We have no clients who save every receipt. But it might help to know that you can deduct sales taxes on large items (the IRS does not define specifically) in addition to the amount calculated by the standard formula. We have had clients deduct as little as $150 additional up to several thousand, so receipts for "big ticket" items are the ones you need to keep on hand.
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            Well that's good to know... Even a used vehicle can have $1000+ Sales tax bill here in TN. I was worried that I would need to prove that the formula was accurate in my case but I guess not. Given our current spending I'm almost certain it will overestimate our tax bill.

            Thanks!

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            • #7
              Just play by the rules- if it overestimates, that's fine. It's a formula to keep things simple.
              Helping those who wear the white coat get a fair shake on Wall Street since 2011

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              • #8
                When I was a resident in TN, we saved every receipt and added them all up at the end of the year.  Seriously.  Some years it paid off, and every nickel helped!  Some years it didn't, and now I just take the standard deduction.

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