CPA Alert - Can I backdoor my sales tax deduction?

[s0me0nesmind1]

1 month into the year... debating if it's worth starting it....

Ugh, I already scan a ton of shit every month. Adding these receipts weekly sounds like a PAIN.


edit: Keep in mind, you have to assume they pass the bill that allows you to take the sales tax deduction in the first place hahaha. Imagine you do that shit all year long... and then they don't pass it.

 

[BoomerD]

1 month into the year... debating if it's worth starting it....

Ugh, I already scan a ton of shit every month. Adding these receipts weekly sounds like a PAIN.


edit: Keep in mind, you have to assume they pass the bill that allows you to take the sales tax deduction in the first place hahaha. Imagine you do that shit all year long... and then they don't pass it.

Well, hell...you have that issue with just about every deduction every year. Sales taxes, property taxes, state income taxes, mortgage deductions, employee business expenses, deductions for donations to charities...any/all of them could be wiped out at any time. (and of course, the taxpayer revolt would begin shortly afterwards...hopefully)

 

[Carson Dyle]

For example, let's say you have a $662 Best Buy charge on your statement. You say it was for a soundbar but the credit card statement doesn't show any detail. The auditor says you could have bought $600 in gift cards plus a Monster HDMI cable. Gift cards are not taxed. You can't provide more detail, and he allows only $55.

Is that true? Gift cards aren't subject to sales tax?

So you could buy yourself gift cards and later use them to purchase something and avoid sales taxes?

 

[BoomerD]

Is that true? Gift cards aren't subject to sales tax?

So you could buy yourself gift cards and later use them to purchase something and avoid sales taxes?

Depends on the state, but IIRC, you'd still have to pay the sales tax when you made the purchase with the gift card...

 

[CPA]

Is that true? Gift cards aren't subject to sales tax?

So you could buy yourself gift cards and later use them to purchase something and avoid sales taxes?

No. I don't think that's what he is saying. He's saying that you can substantiate what was purchased using a credit card statement.

 

[Carson Dyle]

Depends on the state, but IIRC, you'd still have to pay the sales tax when you made the purchase with the gift card...

So the sales tax comes out of the card balance. That makes sense. I've used them, but never noticed about sales taxes.

 

[s0me0nesmind1]

So the sales tax comes out of the card balance. That makes sense. I've used them, but never noticed about sales taxes.

Of course that makes sense. If they taxed the gift card they would be taxing the gift card, which is the "fake" currency used to make the next purchase at the actual store.

Until the person goes to the store and makes a purchase with the gift card, they haven't walked away with an actual piece of merchandise. So why should it be taxed? It would be double taxation. Not that our government minds doing that either *Cough*death taxes*cough*

 

[cabri]

Any sales tax is double taxation.

You are taxed in the creation of the income and then on the use of the income.

 

[s0me0nesmind1]

Any sales tax is double taxation.

You are taxed in the creation of the income and then on the use of the income.

Not the same thing.

You said it yourself, one is an income tax, the other is for the use. Also, one is for federal government, the other is for State and Local government. THAT is the bigger difference.

So I could understand "Double taxation" if both of them went to the federal government, but that isn't the case. Both groups need to get paid in order to function.

 

[BrunoPuntzJones]

You have two choices - go with actual sales taxes paid (you have to support with receipts. Sorry, cc statements are not a substitute in an audit) or use the sales tax tables. If you use the table, you can add taxes paid for vehicles, boats and major home renovations. Alas, weddings is not one of the add-ons.

Believe it or not, some of us do or have used the actual method supported by receipts. Man, it's a pain, though.

Circular 230 approved this message

 

[rcpratt]

I would shoot myself before I kept and scanned every single receipt I receive. My state income tax is probably more anyways.

 

[s0me0nesmind1]

I would shoot myself before I kept and scanned every single receipt I receive. My state income tax is probably more anyways.

I don't have an income tax... soooooo

 

[Carson Dyle]

Why the need to scan the receipts and keep a detailed database of everything? Can't you just throw them in an envelope, forget about them until tax time, add them up for your return, then throw them back into the envelope?

Not nearly as OCD, but doesn't it accomplish the same thing and fulfill your obligation? You get a total for your return and you keep the receipts in case you're audited.

 

[cabri]

Why the need to scan the receipts and keep a detailed database of everything? Can't you just throw them in an envelope, forget about them until tax time, add them up for your return, then throw them back into the envelope?

Not nearly as OCD, but doesn't it accomplish the same thing and fulfill your obligation? You get a total for your return and you keep the receipts in case you're audited.

It is easier to take a painful chore and get it done in little pieces rather than look at a gigantic envelope and procrastinate.

 

[Carson Dyle]

It is easier to take a painful chore and get it done in little pieces rather than look at a gigantic envelope and procrastinate.

That doesn't address the question of why the need to scan the receipts and enter them into a spreadsheet? Whether or not you're breaking up the job into pieces, it sounds like you're doing a lot more work than necessary.

 

[kranky]

Is that true? Gift cards aren't subject to sales tax?

So you could buy yourself gift cards and later use them to purchase something and avoid sales taxes?

I don't know about everywhere, but in my state gift card purchases are not taxable. Seems logical to me - if they taxed the gift card purchase, how would they manage not charging sales tax again when it was used to make a purchase? That would be too complicated.

 

[rcpratt]

Why the need to scan the receipts and keep a detailed database of everything? Can't you just throw them in an envelope, forget about them until tax time, add them up for your return, then throw them back into the envelope?

Not nearly as OCD, but doesn't it accomplish the same thing and fulfill your obligation? You get a total for your return and you keep the receipts in case you're audited.

I think they just don't want to physically have to hold on to the paper.

 

[cabri]

That doesn't address the question of why the need to scan the receipts and enter them into a spreadsheet? Whether or not you're breaking up the job into pieces, it sounds like you're doing a lot more work than necessary.

Scanning and documenting allows you to locate an image of the receipt as needed (IRS accept images as proof)

By putting into a spreadsheet, the totals needed for each tax form line item is now readily available.