Sales Tax Deduction- Sch A

[JDSTAX]

Under The Combination Method For Deducting Sales Tax On Schedule A, "homes" Is Listed. The Clarification Indicates The Purchase Of Mobile Homes And "materials To Build Homes"

I Am Unable To Confirm How Restrictive This Deduction Is. Does A Room Addition Qualify, And How About A Remodeled Kitchen Or Bathroom.

Anyone With Some Insight?

[travis bickle]

Here is some insight . . .

Under The Combination Method For Deducting Sales Tax On Schedule A, "homes" Is Listed. The Clarification Indicates The Purchase Of Mobile Homes And "materials To Build Homes"

I Am Unable To Confirm How Restrictive This Deduction Is. Does A Room Addition Qualify, And How About A Remodeled Kitchen Or Bathroom.

Anyone With Some Insight?

I went to GOOGLE and typed in INSTRUCTIONS FOR SCH A and got this link - http://www.irs.gov/pub/irs-pdf/i1040sca.pdf

On page 5, paragraphs 3b and 3c, it states ... "or substantial additon" . . . or " a major renovation". So, the additional sales tax paid by your client should be added to the Schedule A.

Remember, this is for MATERIALS ONLY. They will need the contractor to price out materials vs. labor, etc.

[BOB W]

I went to GOOGLE and typed in INSTRUCTIONS FOR SCH A and got this link - http://www.irs.gov/pub/irs-pdf/i1040sca.pdf

On page 5, paragraphs 3b and 3c, it states ... "or substantial additon" . . . or " a major renovation". So, the additional sales tax paid by your client should be added to the Schedule A.

Remember, this is for MATERIALS ONLY. They will need the contractor to price out materials vs. labor, etc.

If I recall correctly, the t/p needs to pay for the materials directly. If the contractor included materials in a "Total Price" the T/P cannot claim the sales tax because he didnot directly pay the tax........

[travis bickle]

Sorry to say,

If I recall correctly, the t/p needs to pay for the materials directly. If the contractor included materials in a "Total Price" the T/P cannot claim the sales tax because he didnot directly pay the tax........

but you do NOT recall correctly.

Para 3c on page A-5 of the above referenced pub clearly states the exact opposite of your recollection.

Did you READ the reference material? (My guess would be no).

[BOB W]

Then how come it says "You must keep all receipts" to prove your sales tax paid.

[travis bickle]

You do not

Then how come it says "You must keep all receipts" to prove your sales tax paid.

give your clients the SAFE HARBOR option?

What you are describing is required when pursuing the ACTUAL EXPENSES PAID option.

BTW, when asking "HOW COME IT SAYS ..." questions, the only answer to that is BECAUSE CONGRESS SAID SO.

Finally, DID you read para 3c on page A-5 of the pub I referenced (please do so).

[oceanlovin'ea]

thanks guys

I hadn't thought about this addition.

My mother bought new cabinets for her kitchen last year from Lowes. She asked me last night if she could deduct her cabinets and I told her no. Not energy efficient product.
But she can deduct the sales tax paid. She will like that.

That is if she has enough to itemize.....doesn't usually.......

Linda, EA

[BOB W]

Travis>Please re-read 3c...."your contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items directly"

What this is saying is if your contract does NOT state that the contractor is "Your Agent" the sales tax is NOT deductible.

Please RE READ and learn, understand what it is saying, that NOT ALL sales tax on construction materials are deductable. It is ONLY if the taxpayer has paid the sales tax DIRECTLY..... as I previously stated....

I expect a correction on your part.....................

[BOB W]

Hey Travis... I see you ran away.........??????????????

Travis, you are usually cool with your info but you must be super stressed to be so aggressive and rambling.. SAFE HARBOR OPTION ????? What is that?

[travis bickle]

Yes, I "ran away"

Hey Travis... I see you ran away.........??????????????

Travis, you are usually cool with your info but you must be super stressed to be so aggressive and rambling.. SAFE HARBOR OPTION ????? What is that?

I had work to do and after that, I went home. If you consider that "running away", so be it.

Do you understand what it means to HIRE a contractor? When you HIRE someone to do a job for you, they are acting as your agent. Otherwise, what possible definition of the word HIRE could there be?

Acoording to your logic, if Joe hires Charlie to remodel Joe's kitchen, and Joe gives Charlie $XXXX in funds, THEN CHARLIE CAN CLAIM THE SALES TAX DEDUCTION, BECAUSE CHARLIE IS THE ONE WHO "PAID" THE SALES TAX. If you wish to prepare your returns that way, so be it.

Sorry about SAFE HARBOR. That is what we use when an individual uses the optional sales tax tables published by the IRS as opposed to actual expenses which necessitates saving all receipts - you do realize your client can go with either method?

Until 04/19/2011

[BOB W]

I had work to do and after that, I went home. If you consider that "running away", so be it.

Do you understand what it means to HIRE a contractor? When you HIRE someone to do a job for you, they are acting as your agent. Otherwise, what possible definition of the word HIRE could there be?

Acoording to your logic, if Joe hires Charlie to remodel Joe's kitchen, and Joe gives Charlie $XXXX in funds, THEN CHARLIE CAN CLAIM THE SALES TAX DEDUCTION, BECAUSE CHARLIE IS THE ONE WHO "PAID" THE SALES TAX. If you wish to prepare your returns that way, so be it.

Sorry about SAFE HARBOR. That is what we use when an individual uses the optional sales tax tables published by the IRS as opposed to actual expenses which necessitates saving all receipts - you do realize your client can go with either method?

Until 04/19/2011

You are still missing the point, the contract HAS to say that the contractor is being hired as the T/P's AGENT. If it doesn't say that in the contract, the sales tax is NOT an add-on to the "Safe Harbor" (sales tax chart).