Deduct sales tax, but when

sgallagher · Joined: 25 Aug 2007 Posts: 7

Because Florida, where my mother lives, has no state income tax, she
normally chooses to deduct her state sales tax when she itemizes on
her federal tax return.

In 2006, she purchased and received new new kitchen cabinets and
appliances in 2006. Total was $21,200 which included $1,200 in
Florida sales tax.

The entire amount was deferred billed with no interest for six months,
which means that she didn't get a bill until 2007, which she paid in
full when she received it.

Question: Should she have taken the deduction for 2006, the year that
she purchased and received the goods? Or should she take it for 2007,
the year that she actually paid for them? If she was supposed to take
in in 2006, can she amend her 2006 return to take it now for 2006.

Archived from group: misc>taxes

Paul Thomas · Joined: 25 Aug 2007 Posts: 775

wrote
> Because Florida, where my mother lives, has no state income tax, she
> normally chooses to deduct her state sales tax when she itemizes on
> her federal tax return.
>
> In 2006, she purchased and received new new kitchen cabinets and
> appliances in 2006. Total was $21,200 which included $1,200 in
> Florida sales tax.
>
> The entire amount was deferred billed with no interest for six months,
> which means that she didn't get a bill until 2007, which she paid in
> full when she received it.
>
> Question: Should she have taken the deduction for 2006, the year that
> she purchased and received the goods? Or should she take it for 2007,
> the year that she actually paid for them? If she was supposed to take
> in in 2006, can she amend her 2006 return to take it now for 2006.

Individuals are generally considered to be cash-basis taxpayers, and as such
record income when received and claim deductions when paid.

Charges to a credit card (ie: borrowed money) are considered paid when
charged. The credit card company pays the bill for you, and you owe the
credit card company. So it's deductible when charged.

Now, if it's a delayed payment to the seller (as opposed to the
lender/charge card company) it's deductible when you write the check to the
seller/company. So if I were to incur the property tax liability in
December, but not pay till January, it's a January expense and deduction.
If I incurred a medical expense in December, but paid it in January, it's a
January expense.

If it ends up being a 2006 expense that she could deduct, have her file an
amended return (Form 1040X), which she'll have to mail in.

--
Paul A. Thomas, CPA
Athens, Georgia

Can I deduct this, folks? 1) I bought the movers who moved my business and my private stuff drinks and refreshments. Can I deduct that? 2) My former landlord doesn't want to pay the deposit back that I paid him once. (I lived at the place but also operated my business from there.)

Can I deduct the loss? I have a small business. I have an office in my apartment, my only office. In order to set this office up, I had to give away stuff, property and to make space for the office. I had no time to sell property, so I gave it to the Salvation Army (and got rec

Where to deduct rental startup? Sorry to post again so soon, but our 60-day automatic extension for living abroad is ticking away quickly. I think this question is pretty My wife and I moved abroad for her job last year. We rented out our home and spent some time and mo

how to deduct agent comissions i worked on a cruise ship and paid 10% to the agent (who billed me seperately), the cruise company sent me a w2, how/where do i deduct the agent comissions? thanks, do i have to send in the agents bills with my taxes?

I bought a house for USD 15.000. Can I deduct something and Hi folks, I bought a house in Missouri for USD 15.000. I bought it mainly to make business from that location but I also live in the joint. You guessed it: for USD 15.000, you don't get a palace. I had to invest some more USD 8000,-- to make it livable an