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You can elect to deduct state and local GENERAL SALES TAXES instead of state and local INCOME TAXES as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. You cannot deduct both. To figure your state and local general sales tax deduction, you can use either your actual expenses or the optional sales tax tables.

Per IRS Schedule A Instructions, on page A-4:

State and Local General Sales Taxes

If you elect to deduct state and local general sales taxes instead of income taxes, you must check the box on line 5a. To figure your state and local general sales tax deduction, you can use either your actual expenses or the optional sales tax tables.

Actual Expenses

Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) you paid in 2020 if the tax rate was the same as the general sales tax rate.

Food, clothing, and medical supplies. Sales taxes on food, clothing, and medical supplies are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.

Motor vehicles. Sales taxes on motor vehicles are deductible as a general sales tax even if the tax rate was different than the general sales tax rate. However, if you paid sales tax on a motor vehicle at a rate higher than the general sales tax, you can deduct only the amount of the tax that you would have paid at the general sales tax rate on that vehicle. Include any state and local general sales taxes paid for a leased motor vehicle.

Motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles.

CAUTION! You must keep your actual receipts showing general sales taxes paid to use this method.

TaxAct will use the higher of state and local income taxes, or state and local general sales taxes to report on Line 5 of Schedule A.

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand, then click Taxes paid.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Would you like to review your state and local sales tax?, click Yes.
  5. On the screen titled Choose your sales tax calculation method, click Actual Amount or Table Amount to proceed. If you click Table Amount, you will need to enter the states and the number of days lived in the states, as well as any local and state general sales tax rate, if applicable in the appropriate section of the program.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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