State Sales Tax Deductions

Discussion in 'Tax' started by Cranky One, Feb 27, 2005.

  1. Cranky One

    Cranky One Guest

    1. Do I need to have the actual receipt showing the sales
    tax deduction or can I substitute a check or charge card
    bill showing the store/location and the amount?

    2. What if the receipt doesn't show sales tax ? I had a
    home improvement project and the receipt only shows the
    total cost.

    Thaks for the help !

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    Cranky One, Feb 27, 2005
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  2. Cranky One

    MTW Guest

    Cranky One wrote:

    > 1. Do I need to have the actual receipt showing the sales
    > tax deduction or can I substitute a check or charge card
    > bill showing the store/location and the amount?


    You need receipts with the tax itemized. Otherwise you
    should use the sales tax tables.

    > 2. What if the receipt doesn't show sales tax ? I had a
    > home improvement project and the receipt only shows the
    > total cost.


    You need receipts with the tax itemized. Otherwise you
    should use the sales tax tables.

    Note that if the tax was not itemized on the contractor's
    original invoice, then chances are you are not entitled to
    deduct it (because the contractor, not you, is deemed to be
    the "taxpayer" of the sales tax in that case).

    MTW

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    MTW, Feb 28, 2005
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  3. Cranky One

    A.G. Kalman Guest

    Cranky One wrote:

    > 1. Do I need to have the actual receipt showing the sales
    > tax deduction or can I substitute a check or charge card
    > bill showing the store/location and the amount?
    >
    > 2. What if the receipt doesn't show sales tax ? I had a
    > home improvement project and the receipt only shows the
    > total cost.


    If you want to use the "actual receipt" method, you have to
    a receipt that shows the amount of sales tax paid.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Feb 28, 2005
    #3
  4. "Cranky One" <> wrote

    > 1. Do I need to have the actual receipt showing the sales
    > tax deduction or can I substitute a check or charge card
    > bill showing the store/location and the amount?


    I think the Regs say you need receipts that ~show~ the sales
    tax paid.

    > 2. What if the receipt doesn't show sales tax ?


    Then you can't prove you paid any sales tax.

    > I had a home improvement project and the receipt
    > only shows the total cost.


    Again, it's going to be hard to prove the tax was paid if
    the receipt doesn't indicate any tax.

    --
    Paul A. Thomas, CPA
    Athens, Georgia
    taxman at negia.net

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    Paul A Thomas, Feb 28, 2005
    #4
  5. Cranky One wrote:

    > 1. Do I need to have the actual receipt showing the sales
    > tax deduction or can I substitute a check or charge card
    > bill showing the store/location and the amount?
    >
    > 2. What if the receipt doesn't show sales tax ? I had a
    > home improvement project and the receipt only shows the
    > total cost.


    You'll need a complete receipt showing the tax separtely
    when/if you get audited. And when/if you do, the auditor
    will not accept that total. Or at least shouldn't.

    ChEAr$,
    Harlan Lunsford, EA n LA

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    Harlan Lunsford, Feb 28, 2005
    #5
  6. Cranky One

    DSF Guest

    Something else to add to that issue is gas receipts. I have
    not seen any gas receipts that show how much tax was paid.
    In Tennessee where I live 21.4 cents per gallon is tax. The
    tax is then split three ways with some going to TDOT (TN
    Dept Of Trans.) and the rest going to state and local.

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    DSF, Mar 3, 2005
    #6
  7. DSF wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    Not all of that is "sales tax". However, at least in
    California, some of it is. I suppose this is a minor
    recalculation for those who use the "actual" method of auto
    expenses.

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    Arthur L. Rubin, Mar 3, 2005
    #7
  8. Cranky One

    Phil Marti Guest

    "DSF" <> wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    Most of that is not general sales tax, it's product specific
    excise tax, which is not deductible.

    --
    Phil Marti
    Clarksburg, MD

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    Phil Marti, Mar 4, 2005
    #8
  9. DSF wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.


    Gas tax isn't sales tax, though. At least not in my state.

    Phoebe :)

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    Phoebe Roberts, EA, Mar 4, 2005
    #9
  10. Cranky One

    Thomas Healy Guest

    "DSF"
    <> wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    Gas tax isn't deductible, because it's an excise, not a
    general sales, tax.

    --
    Tom Healy, CPA
    Boulder, CO
    Web: http://www.tomhealycpa.com

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    Thomas Healy, Mar 4, 2005
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  11. Cranky One

    A.G. Kalman Guest

    DSF wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    When it comes to buying fuel, you have to separate all the fuel
    taxes (federal, state & local) from the equation. Then you have
    to confirm that fuel purchases are subject to sales tax. If they
    are subject to sales tax, then the sales tax is typically applied
    to the total cost per gallon including the fuel taxes. I believe
    it would be reasonable to derive the sales tax paid if you have
    the original receipt showing the amount bought and paid. E.g.,
    if tax rate is 6% and fuel bill is $30.00 the tax paid is $30
    minus $30/1.06.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Mar 4, 2005
    #11
  12. DSF wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    Here's a simple reason why nobody's talked about gas
    receipts. Gasoline is not subject to sales tax in any state
    that I know of.

    Does anybody know of any state that does sales tax gasoline?

    ChEAr$,
    Harlan Lunsford, EA n LA

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    Harlan Lunsford, Mar 7, 2005
    #12
  13. "DSF" <> wrote:

    > Something else to add to that issue is gas receipts. I have
    > not seen any gas receipts that show how much tax was paid.
    > In Tennessee where I live 21.4 cents per gallon is tax. The
    > tax is then split three ways with some going to TDOT (TN
    > Dept Of Trans.) and the rest going to state and local.


    Well for one thing, in most states gasoline isn't subject to
    sales tax, its subject to a fuels tax which is not the same
    thing.

    --
    David M. Woods, EA, ChFC, CLU
    Woods Financial Services
    Norwood, MA 02062
    www.woods-financial.com

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    David Woods, EA, ChFC, CLU, Mar 7, 2005
    #13
  14. Harlan Lunsford wrote:
    > DSF wrote:


    >> Something else to add to that issue is gas receipts. I have
    >> not seen any gas receipts that show how much tax was paid.
    >> In Tennessee where I live 21.4 cents per gallon is tax. The
    >> tax is then split three ways with some going to TDOT (TN
    >> Dept Of Trans.) and the rest going to state and local.


    > Here's a simple reason why nobody's talked about gas
    > receipts. Gasoline is not subject to sales tax in any state
    > that I know of.
    >
    > Does anybody know of any state that does sales tax gasoline?


    In Virginia the dealer pays a sales tax on the non-road tax
    part of the gas purchase cost. But it is not added to the
    selling price. The "profit margin" covers it. I doubt the
    sales tax is not claim able by the purchaser. But, maybe
    someone in the Mars family will try.

    --
    Frederick E. Jorden http://Tax-Accounting-Payroll.com
    7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
    EMAIL
    (804) 320-6210 FAX (804) 320-6211

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    Frederick Jorden, Mar 8, 2005
    #14
  15. Cranky One

    A.G. Kalman Guest

    Harlan Lunsford wrote:
    > DSF wrote:


    >> Something else to add to that issue is gas receipts. I have
    >> not seen any gas receipts that show how much tax was paid.
    >> In Tennessee where I live 21.4 cents per gallon is tax. The
    >> tax is then split three ways with some going to TDOT (TN
    >> Dept Of Trans.) and the rest going to state and local.


    > Here's a simple reason why nobody's talked about gas
    > receipts. Gasoline is not subject to sales tax in any state
    > that I know of.
    >
    > Does anybody know of any state that does sales tax gasoline?


    Here are the states I am aware of:
    CA, GA, HI, IN, MI, NY & WV

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Mar 9, 2005
    #15
  16. A.G. Kalman wrote:
    > Harlan Lunsford wrote:
    >> DSF wrote:


    >>> Something else to add to that issue is gas receipts. I have
    >>> not seen any gas receipts that show how much tax was paid.
    >>> In Tennessee where I live 21.4 cents per gallon is tax. The
    >>> tax is then split three ways with some going to TDOT (TN
    >>> Dept Of Trans.) and the rest going to state and local.


    >> Here's a simple reason why nobody's talked about gas
    >> receipts. Gasoline is not subject to sales tax in any state
    >> that I know of.
    >>
    >> Does anybody know of any state that does sales tax gasoline?


    > Here are the states I am aware of:
    > CA, GA, HI, IN, MI, NY & WV


    Is that "GA" as in "Georgia, Alan? If so, I was never aware
    of this, and I am FROM Georgia. Of course I've never had
    any service station clients either.

    What about it Paul (Thomas); is this so?

    ChEAr$,
    Harlan Lunsford, EA n LA
    Wed 9 Mar 2005

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    Harlan Lunsford, Mar 12, 2005
    #16
  17. Cranky One

    A.G. Kalman Guest

    Harlan Lunsford wrote:
    > A.G. Kalman wrote:
    >> Harlan Lunsford wrote:
    >>> DSF wrote:


    >>>> Something else to add to that issue is gas receipts. I have
    >>>> not seen any gas receipts that show how much tax was paid.
    >>>> In Tennessee where I live 21.4 cents per gallon is tax. The
    >>>> tax is then split three ways with some going to TDOT (TN
    >>>> Dept Of Trans.) and the rest going to state and local.


    >>> Here's a simple reason why nobody's talked about gas
    >>> receipts. Gasoline is not subject to sales tax in any state
    >>> that I know of.
    >>>
    >>> Does anybody know of any state that does sales tax gasoline?


    >> Here are the states I am aware of:
    >> CA, GA, HI, IN, MI, NY & WV


    > Is that "GA" as in "Georgia, Alan? If so, I was never aware
    > of this, and I am FROM Georgia. Of course I've never had
    > any service station clients either.
    >
    > What about it Paul (Thomas); is this so?


    My source is:
    http://www.georgiagasprices.com/tax_info.aspx

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Mar 14, 2005
    #17
  18. Cranky One

    A.G. Kalman Guest

    Re: State Sales Tax Deductions (Add'l Followup)

    Harlan Lunsford wrote:
    > A.G. Kalman wrote:
    >> Harlan Lunsford wrote:
    >>> DSF wrote:


    >>>> Something else to add to that issue is gas receipts. I have
    >>>> not seen any gas receipts that show how much tax was paid.
    >>>> In Tennessee where I live 21.4 cents per gallon is tax. The
    >>>> tax is then split three ways with some going to TDOT (TN
    >>>> Dept Of Trans.) and the rest going to state and local.


    >>> Here's a simple reason why nobody's talked about gas
    >>> receipts. Gasoline is not subject to sales tax in any state
    >>> that I know of.
    >>>
    >>> Does anybody know of any state that does sales tax gasoline?


    >> Here are the states I am aware of:
    >> CA, GA, HI, IN, MI, NY & WV


    > Is that "GA" as in "Georgia, Alan? If so, I was never aware
    > of this, and I am FROM Georgia. Of course I've never had
    > any service station clients either.
    >
    > What about it Paul (Thomas); is this so?


    The IRS just published some guidance in Notice 2005-31 on
    deducting sales taxes. Here's the text on what it says about
    the tax being separately stated and paid by the consumer:

    "If the amount of a sales tax is separately stated and paid
    by the consumer (other than in connection with a trade or
    business), the amount of the tax is treated as a tax imposed
    on and paid by the consumer rather than the seller.
    Therefore, the consumer may deduct sales taxes that are
    imposed on the seller if the tax is separately stated (as on
    a contract or receipt) and paid by the consumer. Section
    164(b)(5)(G)."

    Here in CA and I assume the other states that tax gasoline,
    the sales tax is buried in the price per gallon. It is
    usually posted at or near the pump. The sign usually shows
    the federal fuel tax, state fuel tax and sales tax per
    gallon. The actual paper receipt only shows the price per
    gallon. I think it is reasonable to include as a deduction,
    the sales tax paid on the fuel if the sales tax is
    separately identified to the public at the gas station.

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Mar 17, 2005
    #18
  19. Cranky One

    MTW Guest

    Re: State Sales Tax Deductions (Add'l Followup)

    A.G. Kalman wrote:

    > I think it is reasonable to include as a deduction,
    > the sales tax paid on the fuel if the sales tax is
    > separately identified to the public at the gas station.


    My interpretation of the "separately stated" rule would add
    a few words and read something as follows:

    "If the amount of sales tax is separately stated AS REQUIRED
    OR PERMITTED BY APPLICABLE STATE LAW and..."

    In other words, if state law doesn't require or permit the
    separate statement of the tax, then I think it is still a
    "no-go."

    For example, what if rather than billing a client "$400 for
    service rendered," I billed "$399.82 for services rendered,
    plus $.18 for sales tax paid on paper and staples," would
    the client be entitled to claim a sales tax deduction for
    that $.18 cents? I think not, since the billing methodology
    does not meet the requirements of applicable state law, even
    though the tax appears to be "separately stated." (Tax
    preparation service are NOT subject to sales tax in my
    state.)

    On the gas tax question, if state law REQUIRES the
    CONSPICUOUS posting of the tax breakdown, then I would
    probably agree with you on that point.

    MTW

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    MTW, Mar 18, 2005
    #19
  20. Re: State Sales Tax Deductions (Add'l Followup)

    A.G. Kalman wrote:
    > Harlan Lunsford wrote:
    >> A.G. Kalman wrote:
    >>> Harlan Lunsford wrote:
    >>>> DSF wrote:


    >>>>> Something else to add to that issue is gas receipts. I have
    >>>>> not seen any gas receipts that show how much tax was paid.
    >>>>> In Tennessee where I live 21.4 cents per gallon is tax. The
    >>>>> tax is then split three ways with some going to TDOT (TN
    >>>>> Dept Of Trans.) and the rest going to state and local.


    >>>> Here's a simple reason why nobody's talked about gas
    >>>> receipts. Gasoline is not subject to sales tax in any state
    >>>> that I know of.
    >>>>
    >>>> Does anybody know of any state that does sales tax gasoline?


    >>> Here are the states I am aware of:
    >>> CA, GA, HI, IN, MI, NY & WV


    >> Is that "GA" as in "Georgia, Alan? If so, I was never aware
    >> of this, and I am FROM Georgia. Of course I've never had
    >> any service station clients either.
    >>
    >> What about it Paul (Thomas); is this so?


    > The IRS just published some guidance in Notice 2005-31 on
    > deducting sales taxes. Here's the text on what it says about
    > the tax being separately stated and paid by the consumer:
    >
    > "If the amount of a sales tax is separately stated and paid
    > by the consumer (other than in connection with a trade or
    > business), the amount of the tax is treated as a tax imposed
    > on and paid by the consumer rather than the seller.
    > Therefore, the consumer may deduct sales taxes that are
    > imposed on the seller if the tax is separately stated (as on
    > a contract or receipt) and paid by the consumer. Section
    > 164(b)(5)(G)."
    >
    > Here in CA and I assume the other states that tax gasoline,
    > the sales tax is buried in the price per gallon. It is
    > usually posted at or near the pump. The sign usually shows
    > the federal fuel tax, state fuel tax and sales tax per
    > gallon. The actual paper receipt only shows the price per
    > gallon. I think it is reasonable to include as a deduction,
    > the sales tax paid on the fuel if the sales tax is
    > separately identified to the public at the gas station.


    To assume that practices of the California Republic are
    followed by all the other states is a very big assumption.

    --
    Frederick E. Jorden http://Tax-Accounting-Payroll.com
    7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
    EMAIL
    (804) 320-6210 FAX (804) 320-6211

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    Frederick Jorden, Mar 18, 2005
    #20
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