More specifically: things an individual should be able to exempt from taxable income on state and federal tax forms. It seems we pay taxes on some things several times. For example, gasoline, or diesel fuel. We pay about 20 cents of federal tax on fuel, plus 30 cents of state tax on fuel, then again we pay tax on our income that is used to buy fuel. So what are things that should be able to be “written-off” on your taxes?
Well, you pay sales tax on virtually all the money you spend; should it all be deductible for income tax purposes?
There’s no general principal, that I can see, which says that money spent on an item which is subject to sale tax, excise or the lime should be an income tax deduction.
Nothing. Deductions just lead to weird economic distortions and lead to politicians and business and interest groups spending large amounts of money trying to game them.
Just give a simple deduction per person in a household for basic living expenses, and then leave it at that.
But since the cost of living is different that wouldn’t be so simple.
The point of deductions is not to equalize the cost of living. It’s to incentivize certain behaviors. Charitable donations are tax deductible because charitable giving is usually seen as a social good. High-efficiency home fixtures are partly deductible (or even enjoy a credit) because they save energy, etc.
Nobody wants to create an incentive to use more fuel, so there’s no reason to make it deductible.
You can, actually, claim sales taxes or income taxes, federally. Some states also let you reduce your state income based on the federal taxes paid.
So, if you want to itemize your deductions, you can certainly tax sales tax as a deduction. But sales tax is incredibly small compared to the standard deduction that most people take.
For instance, if you are single, you can take a standard deduction of $6,100. If you are already itemizing, you should be well over that amount. But if you are just looking to see if you can get additional savings by deducting your sales tax, you would have to realize how much that is: Sales tax tends to top out around 10%. So, to get to the $6,100 number, you needed to spend $61,000 on taxable items. (Married is $12,200, so $122,000)
That standard deductible is designed to simply and effectively cover all of that sort of deductible expenses for most people. If you have the receipts and want to itemize, use a schedule A to your heart’s content. But at the end, I’ll expect you to probably have less than that standard deduction.
Sales tax is s already deductable for what income tax purposes.
Only if you don’t deduct state income taxes. You should be able to deduct both.
QFT. I started keeping track of mine in Quicken, and it’s ludicrously small. The highest I ever got one year was, I think, 20% of what it needed to be to be itemizable.
That being said, I wish all spousal support were (well, had been) deductible, not just alimony written into a divorce agreement. I paid my ex-wife a heap of money, but neglected to write it into the divorce agreement, so not one penny of it was deductible.
I think college tuition should be deductible. Since going to college increases your lifetime earning potential and thus your lifetime tax payments, it’s in the government’s best interest to help you with a deduction now that will reap their financial gain later. It’s a win for both government and student.
Yeah, AFAICT it’s only really useful if you’re buying a lot of stuff in a high-sales-tax area, or making a few big-ticket purchases. I ended up buying two cars the year after the sales tax exemption was passed, and it was worth itemizing. But that’s about it.
Well, at least you know for next time.
It is. You may be confused because you can’t take both the deduction and a credit, and the latter benefits people more.
On the subject of spousal support, I’ve always wondered why child support isn’t deductible. I get paid, I pay taxes, and then a portion of that money goes to my son’s mother for her to spend tax free.
Yes and no, there’s a ceiling of $4000 on the deduction, no matter how many children you’re paying for in a year. Remove the ceiling on that and we’re getting somewhere.
Student loans, not just the interest.
Rent, to an extent.
Why? What purpose would it serve except to increase the federal deficit and give state governments an excuse to jack up sales taxes?
That should not be tax deductible for the same reason I can’t deduct the money I spend feeding, clothing, and housing my child. Why should a non-custodial parent get to (in effect) deduct those expenses when a custodial parent does not? If I could deduct my kid’s video games and toys and food and all that, I’d never pay income tax again.
It’s probably not workable from an enforcement point of view, but I could get behind tax deduction credits for charitable volunteer work. It seems to me that if you can get a deduction for donations of money and possessions you should be able to get a deduction for donating time.
I think we should be permitted to take a dependent exemption for your non-citizen spouse or dependents not resident in the United States.
As it stands now, if you are a US citizen residing abroad you cannot claim your non-citizen spouse or step-child as a dependent even if you provide all of the their support.
I wasn’t very clear. My apologies. I meant more along the lines of, the person receiving the child support should be the one to pay taxes on it. It doesn’t make sense in the first place that I pay taxes on that money, so I feel as though the money should be deductible.
Fair enough - though considering the government already offers grants and interest-free loans* to students they seem to be doing quite a lot for us already.
Why on earth would you be able to deduct a student loan? It’s not taxed as income.
*not to graduate students anymore, though. Bastards!