Sales Tax Calculation
The IRS offers different options for calculating the amount of your sales tax deduction:
- You can deduct the actual sales taxes you paid if the tax rate was no different than the general sales tax rate in your area. (Exceptions are made for food, clothing and medical supplies — actual sales tax on these items is deductible even if you paid less than the general tax rate.) But for this method to work, you must have tracked all your purchases and sales taxes paid over the course of the year.
- If you didn’t track your purchases and have no idea how much you spent on sales tax, the IRS provides optional state sales tax tables based on each state’s sales tax rate, your family size and your income level. You can see the tables in the IRS instructions for Schedule A. Or, there’s an even easier method: Use the IRS sales tax deduction calculator to figure out how much sales tax you can deduct.
- For Maryland or any state with a 6% sales tax rate, you can use the TaxLinx charts:
In addition to using the sales tax amounts provided by the IRS in the tables and the calculator, taxpayers may add actual sales taxes paid for specific big-ticket items. For example, sales taxes paid for motor vehicles can be deducted up to the amount of the state and local sales tax rate, but not higher. Allowable sales tax deductions for large purchases include the following:
- Cars, SUVs, trucks, vans.
- Motorcycles.
- Motor, mobile or prefab homes.
- Materials to build or renovate a home.
- Recreational vehicles.
- Off-road vehicles.
- Aircraft.
- Boats.
Taxes spent on leased vehicles can also be deducted. Don’t include sales taxes paid in relation to your trade or business, or if you’ve already received a refund for the sales tax in the year you paid it.
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