02-28-12 - WA Sales Tax Deductions

In WA because we have no state income tax, you will deduct sales tax paid from your federal income taxes instead.

Since I'm not completely fucking insane, I don't keep every single receipt for every purchase all year. Fortunately you can just use the IRS formula and take a computed sales tax deduction. On top of the sales tax formula, you can also deduct the actual sales tax on certain additional items.

Cars is a big one.

Major home improvements is a gray area that you could probably stretch if you wanted to. You can deduct sales tax for materials (not labor) (including if a sub-contractor bought the materials). But it's supposed to only be for "substantial additions" not repairs.

Another little one I noticed is that the RTA portion of vehicle registration in WA is based on a percentage of the car's value (the rest of the registration fee is not; it's size/weight based). Any fee that's a percent of value counts as a sales tax, so this is deductable. (it's about $200 for me).

BTW I continue to be a big fan of "TaxAct" for foolish people like me still doing their own taxes. It's non-web-based, and let's you just enter directly in the forms instead of going through some nonsense Q&A. However, it does seem unable to import data directly from Vanguard which is a bit annoying. That would be less annoying if you could copy-paste a 1099 form and just change a few spots, but it seems you can't do that either. So lots of typing (or manual ctrl-c-ctrl-v'ing) is required.

BTW2 you might be tempted by the real estate excise tax (1.78% in Seattle). My research says that this is technically charged to the seller, and furthermore even if you are the seller apparently it is an "excise tax" not a "sales tax", and therefore not deductible. (it can be subtracted from the "basis" but that is rarely relevant due to the large real estate capital gains dead zone).

old rants