To enter personal property tax or sales tax paid on a new vehicle:
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
- Click Itemized or Standard Deductions to expand the category and then click Taxes paid
The program will proceed with the interview questions for you to enter or review the appropriate information
- To enter sales tax paid, continue to the screen titled Itemized Deductions - Optional State Sales Tax
- To enter property tax paid, continue to the screen titled Itemized Deductions - Personal Property Taxes
Personal Property Taxes
According to the IRS Instructions for Schedule A, you can only deduct state and local personal property taxes if they were based on value alone and were imposed on a yearly basis. The most common type of personal property tax is vehicle registration fees. Many state or local taxing authorities base this fee on the value of your vehicle. If you're unsure whether or not your vehicle registration fees are based on value, please contact the taxing authority for verification. See Auto Registration Fees for more information.
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). You cannot deduct both. To figure your state and local general sales tax deduction, you can use either your actual expenses or the state sales tax tables.
This allows you to put in the actual amounts paid. You will need to have receipts as proof for these amounts.
This allows you to enter the information and use a standard tax (percentage) rate. You may also be able to add the state and local general sales taxes paid on certain specified items, such as motor vehicles (purchased or leased), aircraft, boats, homes (including mobile and prefabricated homes) and home building materials.
Per IRS Schedule A Instructions, page A-7:
Instructions for the State and Local General Sales Tax Deduction Worksheet - Line 7
Enter on Line 7 any state and local general sales taxes paid on the following specified items. If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets.
- A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Also include any state and local general sales taxes paid for a leased motor vehicle. If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate.
- An aircraft or boat, if the tax rate was the same as the general sales tax rate.
- A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies.
- Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of substantial addition or major renovation.
- You purchased the material to build a home or substantial addition or to perform a major renovation and paid the sales tax directly.
- Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly.
Per IRS Publication 17 Your Federal Income Tax, page 152:
Taxes and Fees You Cannot Deduct
- Employment Taxes (Social Security, Medicare & Railroad Retirement withheld)
- Estate, inheritance, legacy or succession taxes
- Federal Income Taxes
- Fines and Penalties
- Gift taxes
- License fees (marriage, driver's, dog, etc.)
- Per capita taxes