Hypothetical Taxpayer X lives in NH on the border of MA. NH has no state income or sales taxes. MA has both.
Taxpayer X works in MA and is eligible to deduct the income tax paid to MA from his federal taxes. Is Mr X eligible to deduct the sales tax he pays when shopping in MA instead of his MA income tax under the American Jobs Creation Act of 2004?
It seems like a pretty straightforward question, but I’ll be damned if I can find the answer anywhere on the IRS website or elsewhere.
Mr X is just a hypothetical taxpayer, and no one should base their tax filings on any advice obtained on an internet message board yadda yadda.
IANAA, but when I was filling out the forms in TurboTax (which is free this year), it said that you can deduct either the sales tax you paid, or the state income tax, but not both. Of course, I chose to take the sales tax, since Texas has no income tax. I’m not sure how this might be complicated by the across-the-border issue you have.
I actually called the IRS this afternoon, and the woman put me on hold for an eternity while they tried to figure out the answer. She came back and said, “Well, I can’t find anywhere that says you can’t take it.” :dubious:
I just don’t get why this isn’t bigger news around Hypothetical Taxpayer X’s parts.