How Itemizers Can Calculate Sales Tax Write-Offs

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In the third article of his four-part series on itemized deductions for state income taxes versus state and local general sales taxes, expert Julian Block explains the two options for writing off sales taxes, as well as the tax breaks individuals can receive if they buy boats, aircraft and similar high-price items.

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For those of you who’re just joining in, part one explained Form 1040’s Schedule A allows itemizers to deduct state and local income taxes or state and local general sales taxes. They can’t write off both in the same year (line 5a of 2020’s Schedule A for itemized deductions).

Part two discussed breaks on deductions for sales taxes for residents of states with low rates for income taxes and for seniors who live in states that authorize lower rates, exemptions and other kinds of special breaks for retirement income.

Part three explains that itemizers Sydney and Lucie Carton have two options for calculating their write-off for sales taxes. The law allows them to total up the actual taxes on all of their purchases throughout the year, assuming they retained the receipts, or to use the “Optional sales tax tables” that are included in the instructions for Schedule A.

Another break becomes available to the Cartons and other affluent individuals when they shell out sizable payments for state and local general sales taxes on big-ticket purchases of such items as autos, aircraft and boats.