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Deduct your Prius sales tax on your Fed Tax

Discussion in 'Gen 2 Prius Main Forum' started by Marlin, Dec 3, 2005.

  1. Marlin

    Marlin New Member

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    Did you know that you can deduct your state sales taxes, including the tax you paid on your Prius, from your Federal taxable income if you itemize deductions?

    The "American Jobs Creation Act of 2004" added this provision for 2004 and 2005. For it to apply past 2005, they would have had to extend it and I don't know if they did. But, if you bought your Prius this year, you can deduct it's sales tax.
     
    #1 Marlin, Dec 3, 2005
  2. Kiloran

    Kiloran New Member

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    #2 Kiloran, Dec 3, 2005
  3. lee

    lee New Member

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    If you pay state income taxes, you get to deduct one or the other, not both. Chances are, your state income taxes are higher, and a hell of a lot easier to track than all the sales tax you paid for the year.
     
    #3 lee, Dec 3, 2005
  4. Kiloran

    Kiloran New Member

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    Quite right. B)
     
    #4 Kiloran, Dec 3, 2005
  5. Wolfman

    Wolfman New Member

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    Additionally, if you paid out MORE sales tax than the charts guesstimate for your income, you are allowed to deduct the higher amount. I can tell you that it's an effort to keep up with the sales tax amounts. I ended up building a spreadsheet in which I input all of my sales tax amounts from my receipts. These are seperated by the month, with a running YTD total. I then take the entered receipt, and put it in a shoebox. I have almost $2300 in sales tax recepts set aside, including the purchase of the FEH. The result is well worth the effort. Hopefully they'll get this deduction extended beyond this year.
     
    #5 Wolfman, Dec 3, 2005
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