New state sales tax deduction (US federal tax q)

[LilyoftheValley]

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.

[CurtC]

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.

[LilyoftheValley]

Thanks for replying, Curt. Yes my question is whether one can deduct sales tax (and only sales tax) from one’s non-resident state.

It’s odd to me that no one has answered my question yet. It should be a straightforward “yes” or “no” presumably spelled out by the new legislation or by the IRS.

Please, Dopers?

[CurtC]

In the help feature of the TurboTax online system, it says:

• Actual amount: You can enter the actual state and local sales tax amount you paid on all purchases you made in 2004.

• Calculate it for you: We can calculate the sales tax amount for you using the IRS formula and your total sales tax rate (state sales tax plus any local sales tax). You can add sales tax paid on major purchases to the calculated amount.

If you lived in one of the following states, you must enter the actual sales tax amount you paid during 2004 because they do not have a statewide sales tax:

• Alaska
• Delaware
• Montana
• New Hampshire
• Oregon

See IRS Publication 600, Optional State Sales Tax Tables, for the sales tax tables and other information.

So you’re not eligible for the formula, but you can write off the sales tax on items for which you have a receipt.

[LilyoftheValley]

@CurtC

In the help feature of the TurboTax online system, it says:
<snip>
So you’re not eligible for the formula, but you can write off the sales tax on items for which you have a receipt.

Hey! Thanks!

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.