Sales tax & income tax

[taxmandan]

I have a new client who moved mid-year from a state with sales tax, no income tax to our wonderful state with income tax, no sales tax. Can I deduct on Sch A the sales tax for the half year they lived & worked in that state AND the income tax withheld for their new home?

[BOB W]

Sales Tax

Last year I posed this question to Brad and he indicated it was an annual computation not a State by State issue.

[Gene V]

more than one state

If you still have Pub. 600, it has Example on how to figure your sales tax deduction when you lived in more than one State. The Example only shows states with sales tax. I would use the sales tax option table for the State with sales tax.

[ecb34691]

My s/w breaks up the days by state.

[Bees Knees]

TTB, page 4-9, "Taxpayers can elect to deduct state and local general sales taxes instead of state and local income taxes. Taxpayers cannot deduct both."

This agrees with Schedule A, page A-3 instructions: "You can elect to deduct state and local general sales taxes instead of state and local income taxes. You cannot deduct both."

The instructions continue..."What if you lived in more than one state? If you lived in more than one state during 2005, look up the table amount for each state using the above rules. If there is no table for your state, the table amount is considered to be zero. Multiply the table amount for each state you lived in by a fraction....."

All of the examples and rules under General Sales Taxes in the Schedule A instructions for multiple states and multiple localities deal with how to determine the sales tax deduction for the period of time you lived in a particular locality. None of the examples mix in the state income tax paid during a period where sales tax is low or non-existent in a particular locality. This is in line with code section 164(b)(5) which indicates it is one or the other. The taxpayer elects to deduct either the general sales tax for the entire year, or the state income tax for the entire year. There is no provision in the code to take the greater of the two for living in multiple localities during the year.