| Traditionally, one has looked to claim the payment of | | | | only be claimed for the 2004 and 2005 tax years. |
| state income taxes as a deduction on federal taxes in | | | | Practically speaking, this means it has expired and |
| one form or another. Recent legislative changes have | | | | cannot be claimed on your 2006 taxes. At least, that |
| added sale tax payments into the equation. | | | | was everyone's belief. |
| In 2004, a unique tax code was passed as part of the | | | | As the Republican majority was about to be swept |
| American Jobs Creation Act of 2004. Within the | | | | out of office, it decided to actually do some work. No |
| morass of text, a new tax deduction was created. | | | | Congressional period has passed less legislation during |
| That deduction allowed people to substitute in the total | | | | its term than the last one. Regardless, one of the steps |
| sales tax they paid during the year in lieu of the state | | | | was to pass the Tax Relief and Health Care Act of |
| income tax when claiming a deduction on their federal | | | | 2006. One of the provisions in the legislation extended |
| tax return. | | | | the sales tax deduction through the 2007 tax year, to |
| The sales tax deduction was considered a major help | | | | wit, you can claim on this year's tax return and next |
| for people living in certain states. As you probably | | | | year. |
| know, certain states do not collect income taxes from | | | | Unfortunately, Congress procrastinated so long that |
| their residents including Florida, Nevada, Texas and | | | | the extension of the deduction does not appear in IRS |
| Wyoming to mention a few. Since no income tax was | | | | forms mailed out at the end of the year. The Agency |
| collected, these people missed out on a deduction | | | | is trying to get word out, which is also the point of this |
| from their federal return. The sales tax deduction filled | | | | article. If you wish to claim the sales tax deduction, you |
| that gap. | | | | need to get a revised schedule A for your 1040 form. |
| While the sales tax deduction was a positive step, | | | | Alternatively, you can claim it on line 5 of the return |
| there was one problem. The American Jobs Creation | | | | and write "ST" next to the box. Bet the IRS computers |
| Act was limited in time. Specifically, the deduction could | | | | are going to love that! |