Sales tax amount? IRS calculator?

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Jack
Jack Member Posts: 3 Newcomer
edited April 15 in Filing my taxes

When doing my federal return at freetaxusa.com, one question is simply "Enter the total amount of sales tax you paid during 2023" and I don't know what to put here. Everything I read says to use the IRS Sales Tax Deduction Calculator.
https://apps.irs.gov/app/stdc/
The calculator asks if I bought a house in 2023. We did, so when I select house, it says "Enter taxes paid" for that house. What all taxes is that referring to, and how do you find them?

The IRS calculator also asks for all the residence counties lived at in 2023. I lived at one, and my now wife lived at another, and got married in 2023 we now live in another one, but the calculator only allows for one person, as it asks for the date periods and doesn't let you put more than one residence for a date.

The calculator also mentions home renovations. If I had someone else do the work, do I put that here or not?

Answers

  • Jack
    Jack Member Posts: 3 Newcomer
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    On the IRS's calculator, when I click the "?" next to "Home", it says:

    "Enter any state and local general sales taxes paid on the purchase of a home,
    including a mobile home or prefabricated home, but only if the tax rate
    was the same as the general sales tax rate and any of the following
    applies:

    • Your state or locality imposes a general sales tax directly on the sale of a home
    • You purchased the materials to build a home and paid the sales tax directly
    • Under your state law, your contractor is considered your agent in the
      construction of the home. The 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 subject to a sales tax and to have paid the sales
      tax directly"


    Does this first bullet point normally apply? I'm in TN.

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 247
    edited April 19
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    Hello,

    The reason you use State Sales Tax as an itemized deduction is you live in a state with no state income taxes. So, the strategy is to enter big ticket items like a car, house or major renovations. Then use a state sale tax estimator to get a close estimate of your yearly sales tax paid.

    If TN has general sales tax of a home purchase, that is a big ticket item to include.

  • Jack
    Jack Member Posts: 3 Newcomer
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    Thank you but that didn't answer my questions.

  • CoryF
    CoryF FreeTaxUSA Agent Posts: 65
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    Thank you for this feedback.

    If you bought a home already made, it is likely you would not have paid Sales tax on the purchase. However, it is possible that a Sales tax could have been part of the Purchase and would be found in the Closing Costs in your Settlement paperwork. The multiple states don't all have the same taxes and laws in the case of Sales Taxes charged on home buying. So, the IRS calculator is asking for more information to be accurate.

    Since TN does not impose a State Income tax, they would likely have a State Sales Tax.

    Also, the Renovators would have paid sales taxes on the materials that were purchased, but in this case, they would have the Sales Taxes paid amount for their tax return.

    The instructions to Itemized Deductions has examples of living in different localities in the same state. You can look at page A-6 for examples to follow for your separate living before getting married in 2023.