Mar 13, 2008 11:01 AM
New York State residents who file itemized federal income tax returns might benefit from the sales tax paid throughout the year.
Taxpayers who elect to itemize deductions may deduct state and local income taxes or, starting in 2004, state and local sales taxes. Since we do not pay state and local taxes on our TRS pensions, many of us have no or very low state and local income tax payments. Such people should compare the amount of income tax paid vs. sales tax paid and, if the sales tax payments are higher, they should deduct the sales tax.
There are two ways to calculate the amount of sales tax paid. One way is for individuals to keep all their sales receipts and tally the sales tax deduction. Those who live in New York City or another community that has its own sales tax should make sure that they include the local tax.
Since the IRS does not include tables for local taxes, the member should add an amount based on the rate of the local tax. For New York City residents, the total deduction is equal to 1.97 times the state sales tax table.
If you use the tax tables, you may add to the allowed figure the sales tax on large ticket items such as motor vehicles, homes or home building materials.
You should check this information with IRS publication 600 or your tax preparer.