Is FL sales tax deductible?

[CapeFlyer]

Using Turbo Tax, I entered the sales tax I paid Florida when I bought the Mainship last spring. Turbo Tax software says it’s not deductible. Explanation: As I only had to pay the County sales tax of 1% on just the first $5000, that, and the 6% I paid Florida cannot be added to my sales tax deductions. But, get this, had I paid the county tax on the entire purchase price, it, plus the state tax would be entirely deductible!

I’m wondering whether any other Floridian members have dealt with this issue or hopefully it’s a Turbo Tax error?

 

[menzies]

I paid the max of 18K back in 2016 and, while i cant get to my tax return right now, I do believe i was able to claim it. Are you limited in your deductions by AMT?

 

[CapeFlyer]

From what I gather deductibility relates to the percentage of the purchase paid vs the percentage you would normally pay in the Florida county you live in.

If you buy a car for $50,000 in Manatee County the state gets $3,000 (6%) and the county gets $500 (1%) so the amount paid is 7% and you can deduct $3,500. Now if you buy a boat for $50,000 the state gets $3,000 but the county only collects on the first $5,000 and gets $50. So you'd have paid $3,050 on $50,000 =6.1%

Now Turbo Tax says since you paid less that 7% you get no deduction!

I called the yacht broker's bookkeeper who is checking with their CPA. I can't believe this is correct.

 

[JLD]

I'm guessing this is a question for you federal tax return, as I understand Florida does not have state income tax?

Wonder if there will be a change for 2018, as I presume this for your itemized deduction?

Jim

 

[IronZebra]

Try it in H&R Block software and see what happens. I believe they only charge you if you actually use them to file.

 

[CapeFlyer]

Got this info back from the broker's CPA:

" I think he can pay the sales tax that he did pay (the 6% on the total plus the applicable .5 to 1% local portion). I'm not sure why they don't think he can claim it. You just can't claim more than you actually paid. I think for some of the states when it comes to use tax, you only get a credit up to the amount of sales tax rate for your own state, but that is a different situation."

 

[dhays]

From what I gather deductibility relates to the percentage of the purchase paid vs the percentage you would normally pay in the Florida county you live in.



If you buy a car for $50,000 in Manatee County the state gets $3,000 (6%) and the county gets $500 (1%) so the amount paid is 7% and you can deduct $3,500. Now if you buy a boat for $50,000 the state gets $3,000 but the county only collects on the first $5,000 and gets $50. So you'd have paid $3,050 on $50,000 =6.1%



Now Turbo Tax says since you paid less that 7% you get no deduction!



I called the yacht broker's bookkeeper who is checking with their CPA. I can't believe this is correct.

I don’t want to offend, but honestly, this is a question to ask your own CPA! I’m a big fan of turbotax and used for your years when my tax situation was relatively simple. However, when things get more confusing it is best to consult a professional, pay them, and get a solid answer.

OTOH, the IRS can’t afford to do nearly as many audits of returns as they used to. So if you are feeling lucky....

 

[markpierce]

Contact turbotax for an explanation. Sales/use tax is fully deductible from income if one doesn't take the standard deduction. If subject to AMT, the value of deductibles decrease. ... For the 2018 tax year, state and local tax deduction is limited to $10,000 which is only good if total deductibles exceed the raised standard deduction.

 

[MYTraveler]

FWIW (I am not a tax lawyer / accountant, but do spend lots of time talking to them), my understanding is that for federal purposes you must elect between deducing state (and local) income taxes, versus sales tax -- you may not deduct both. Should be a non-issue in Florida.

 

[Comodave]

FWIW (I am not a tax lawyer / accountant, but do spend lots of time talking to them), my understanding is that for federal purposes you must elect between deducing state (and local) income taxes, versus sales tax -- you may not deduct both. Should be a non-issue in Florida.

+1. I believe this is correct. We were not able to deduct the sales tax when we bought our last boat unless we gave up the other taxes.