Tax deductilbe sales tax? (taxes, rate, financing, income)

[Roman45]

Hello,

I live in California. In 2011 I purchased a new car which I am currently financing. I paid about $1700 in sales taxes which of course was added to the cost of the car. I have currrently learned that this may be tax deductible on my federal income tax. Is this correct and if so how much is deductible? Should I go back and redo my taxes for that year? If this is correct, how long do I have to file an amended return? Thank you for looking over my questions.

[golfgal]

Go online to Turbo Tax and use their free version. There is a standard deduction and an actual deduction. Chances are the standard deduction is higher but they will figure it both ways. You can then file your amended returns if needed. You have long time, years, to file the amendment.

[Thepreacherswife]

When you itemize you can choose to deduct either state income taxes or state sales taxes, but you can't deduct both. There is a standard amount for sales tax deductions based on your state, but you can deduct a higher amount if you have the actual receipts. The trick is that if the sales tax rate you paid for your car purchase is higher than the general sales tax rate, then you can only deduct the amount of sales tax that is attributable to the general sales tax rate.

California has high income tax and high sales tax. You'll have to crunch the numbers to see which results in the higher deduction. The instructions to Form 1040, Schedule A have the details.

[Flamingo13]

It takes a lot of BIG purchases to get enough sales tax to claim - you're also financing it which means a small amount spread out over the life of the loan.

[crescent22]

Since sales tax and state income tax rates are about the same in CA, you would have to have receipts equalling your income to choose the sales tax method.

Odds are you deducted state income tax from your 2011 return, and this new knowledge does not change that this was the right answer.