Don't Forget the Sales Tax!
As we've discussed in previous postings, the new Sales Tax deduction is a boon to Washington taxpayers. Just remember to let us know about any major purchases you've made in 2004 that would qualify for an additional deduction. Sales taxes paid on (non-business) purchases of vehicles, boats, planes, and home improvements can be deducted in addition to the base sales tax deduction given by the IRS.
Many clients tell us that they have purchased their home building materials tax-free in Oregon. These expenses aren't deductible -- no tax was paid, so there's no tax to deduct.
We'll be glad to help you with any questions you have on this new deduction!
4 Comments:
What do you think about sales tax on golf carts, ORVs? They are motor vehicles. Riding lawn mowers? Electric scooters? How far can it go?
That's a great question. The IRS defines motor vehicles as the following in Publication 600:
• Cars,
• Motorcycles,
• Motor homes,
• Recreational vehicles,
• Sport utility vehicles,
• Trucks,
• Vans, and
• Off-road vehicles.
You can see they're shooting for real vehicles, but in your question, you mentioned off-road vehicles. That's a little open to interpretation, but most definitions would include ATVs. There's not much definitive guidance here, since this is a relatively new provision, but hopefully the above list will help your planning.
What constitutes "Home building materials"? Is this limited to matials for a new home, or does it include items purchased for home remodeling?
What are home building materials? It seems like a simple question. Unfortunately no definitive guidance has yet been issued that answers the question.
We have advised clients that materials used to remodel their home should qualify. What's not as clear are improvements like building a shop, reworking the landscaping, or adding a heat pump. In these cases, we have to advise clients that there's no clear answer, but it's not unreasonable to consider many of these as qualifying purchases. Basically, our stance has been one of 'deduct at your own risk'.
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