Today's tip: Deduct your sales taxes
Thursday, March 04, 2010
More states are taxing more things to help them bridge their growing budget gaps.
In fact, the average state sales tax rate in the U.S. now stands at 5.468 percent, according to a report from Vertex Inc., a provider of global tax management services.
The Pennsylvania-based company says that's the highest average rate since it began tracking sales tax rate changes in 1982.
In the 2009 report, Vertex found nine sales tax rate increases last year: California, Delaware, Minnesota, Massachusetts, North Carolina, Utah and Nevada, and the District of Columbia.
You counted the list didn't you?
And you came up with only eight jurisdictions.
Number nine, says Vertex, comes courtesy of North Carolina, although I'm sure N.C. residents will use a word other than "courteous" to describe how they feel about their increased purchasing costs. The Tar Heel State hiked its rate twice in 2009, accounting for the ninth state increase in the report.
The one tiny silver tax lining here is that you can use those ever-rising state and local sales taxes to reduce your federal tax bill. And this year, some sales taxes can be deducted by folks who claim the standard deduction instead of itemizing.
The details on how to do that are in today's tax tip, #41 if you're counting: Using sales taxes to trim your tax bill.
Tracking all the tips: You are getting your daily dose of tax tips, right? One a day could help keep the auditor away.
Even better, they could mean savings when you send the IRS your Form 1040.
So be sure to check the upper right corner of the ol' blog for a new tip every weekday through April 15.
And don't worry if you miss one or two. You can find them all in our comprehensive Daily Tax Tips list.
- 10 states in big financial trouble
- State tax refund delays are now the norm
- State tax collections nosedive
- Bet on it, states are struggling
- State tax collectors ramp up enforcement
- Don't forget your state taxes!
- Daily Tax Tips for 2010
- DMWT tax tips archive
- 7 new tax laws that could save you money
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I would fully agree that most taxpayers do not take advantage of this and I think the reason why is that very few know you can do it! When it comes time to calculate your income tax at the end of the year this be helpful info.
Posted by: Income Tax Calculator | Wednesday, June 23, 2010 at 06:00 PM
Not many taxpayers take advantage of this. Too bad because there are benefits for some.
Posted by: Gilbert AZ CPA | Saturday, March 13, 2010 at 09:02 AM