Has the Tax Cuts and Jobs Act affected the Sales Tax Deduction?
Yes. Your total deduction for state and local income, sales and property taxes is limited to a combined, total deduction of $10,000 ($5,000 if Married Filing Separately).
Does the Sales Tax Deduction Calculator use a methodology that differs from the worksheet in the Schedule A instructions?
No. However, it has built into it information on local sales tax rates, which are not contained in the paper instructions. It also does the math for you.
Why is this methodology called “optional”?
Because this is in lieu of your having to add up all of your general sales tax payments from your receipts, which you are always entitled to do.
Will the IRS retain any information about me when I use the calculator?
No. Although we do not use or retain any personal information about users of our web site, we do compile general usage statistics, such as the number of visits, the number of page views, etc.
Why aren’t the “specified items” already accounted for in the tables, etc.?
These “big ticket” items are generally not purchased every year. If an average annual amount were included in the tables for these purchases, then taxpayers would be able to get double benefit for them: using their actual receipts in years when they purchased such items, but using the tables in all other years. As a result, the law provides for such items to be accounted for outside of the tables entirely.
Why are there different methodologies for determining one’s local optional sales tax deduction, depending on one’s state or locality?
There are two key features of a general sales tax: what is taxed (the tax base), and how much it is taxed (the tax rate). Among the states that have local sales taxes, these two features create three basic categories:
- Those in which the local tax base is the same as the state tax base and there is just one local sales tax rate throughout the state — in this case (e.g., Virginia), the local sales tax amount can be included with the state table using a combined rate on the same items.
- Those in which the local tax base is the same as the state tax base, but the local sales tax rates vary throughout the state — in this case the local sales tax amount can be derived from the state amount using the ratio of the local rate to the state rate.
- Those in which both the local tax bases and the local sales tax rates vary throughout the state — in this case the local sales tax amount must be derived independently from the state amount.
Is it necessary to tell the Sales Tax Deduction Calculator that I made a local move (within the same state and ZIP Code)?
Not if you’re sure that you stayed within the same local taxing jurisdiction. Many ZIP Codes contain more than one local taxing jurisdiction, however. If you changed your City or County of residence (even within the same ZIP Code), then you should enter your new residence separately in the Calculator. In any case, it’s always a good idea to enter both locations if you’re not sure; the Calculator will give the correct answer whether or not the two locations have different sales tax rates.
Why is the local tax rate averaged in my locality?
The deduction for state and local general sales tax is meant to be the amount of sales tax actually paid by the taxpayer. Rather than require taxpayers to keep all of their receipts, the tax law allows taxpayers to use the optional sales tax tables provided by the IRS to approximate their sales tax payments using average consumption patterns, taking into account the relevant tax rates and the taxpayer’s income and family size. If a locality (defined as a state-county-ZIP Code combination) has more than one taxing district, the calculator uses the average of the local sales tax rates among those districts in order to estimate the amount of sales tax the average taxpayer in that locality actually paid. This assumes that residents purchase taxable items throughout the locality, not just in the taxing jurisdiction where they reside. For example, if there are two tax districts within a locality, with local tax rates of 1% and 2%, then the calculator uses 1.5%, which is the average of the two local tax rates. The average provides a much more accurate estimate of the sales tax actually paid by taxpayers in localities with multiple taxing districts.
I am a Member of U.S. Military deployed in an overseas Military Zone. Can I use the Sales Tax Deduction Calculator?
Yes. Sales Tax Deduction Calculator has been updated with overseas U.S. Military Zone and Districts where members of U.S. Military pay no sales tax. U.S. Military Personnel who are deployed overseas can use the calculator to determine the sales tax they paid while they were within the United States. When using the calculator, please choose from one of the following Military Zone abbreviations:
|AA - Military Personnel in the Americas,
|APO - Military Post Office for U.S. Army & Air Force Personnel
|AE - Military Personnel in Europe, Middle East, Africa and Canada
||FPO - Military Post Office for U.S. Navy Personnel
|AP - Military Personnel in Asia Pacific||DPO - Post Office for U.S. Embassy, State Department and other Diplomatic Personnel|