If a taxpayer itemizes deductions, they can choose to deduct state and local income taxes or state and local general sales taxes. If they choose the general sales tax deduction, there are two methods used to calculate the amount they are able to claim. The first method requires the taxpayer to keep receipts for all purchases made during the tax year. The second method is a general sales tax rate based on the IRS Optional State and Local Sales Tax Tables.
A taxpayer can deduct either the amount of state and local income tax they paid or the general sales tax rate plus any general sales tax paid on certain specified items (see the State and Local General Sales Tax Deduction Worksheet instructions for line 7 here for the list of specified items).
TaxSlayer Pro will allow amounts for both to be entered and will calculate the deduction based on whichever option is more beneficial to the taxpayer.
Note that for tax years starting after December 31, 2017, the taxpayer is limited to deducting $10,000 of state and local taxes ($5,000 if married filing separate).
Program Navigation
To access the State & Local General Sales Tax Menu, from the Main Menu of the Tax Return (Form 1040) select:
- Deductions
- Itemized Deductions (Schedule A)
- Taxes You Paid
- Total State & Local General Sales Taxes - Select either Use Sales Tax Table Worksheet or Enter Sales Tax Receipts Only.
Enter Sales Tax Receipts Only
If the taxpayer saved their receipts for their purchases throughout the year, enter the sum of the sales tax that was paid.
Use Sales Tax Table Worksheet
If you choose to use the Sales Tax Table Worksheet, the program will pull the taxpayer's address and AGI and calculate the general sales tax from the sales tax tables in the Schedule A Instructions.
- If the taxpayer lived in the state the entire year, leave number of days in the state as 0. If the taxpayer lived in more than 1 state during the year, enter the number of days they lived in this state.
- The Local General Sales Tax Percent and the State General Sales Tax Percent will also pull to the menu from the instructions. These fields can be changed if needed. Finally, enter the General Sales Taxes Paid on the Specified Items (see the sales tax worksheet, line 7 instructions for a list of specified items). The program will calculate the deduction for general sales tax.
Additional Information: