The math is not the hard part of this new law.

There are two problems with it.

1. Nothing has been said about Tennessee residents where one spouse works
in Georgia.
Do you have to file separately to take advantage of this new deduction.

2. Unfortunately, there was insufficient advance warning for many of us to
take advantage of it.
How many folks saved every single receipt from last year, hoping there
would be a sales tax
deduction? I have plenty of credit card statements where it would be easy
to figure out
the sales tax amount, but I sure auditors would frown upon that.

If anyone has information, I'd be glad to know!

Ken Dryden

At 04:41 PM 1/25/2005, you wrote:
>I originally sent this article before Christmas and need to add something.
>The IRS table for the sales tax deduction only includes the STATE portion of
>the sales tax (7%).  You can ALSO deduct the local county/city portion of
>sales tax (2.25%) so that you get to deduct the full 9.25% (Hamilton
>County/City of Chattanooga) sales tax amount.
>
>
>
>The IRS circular has a worksheet to figure out the local sales tax amount.
>You can use that worksheet or the formula with example I devised below.  For
>my example, you get the same amount with my calculation or using the IRS
>worksheet.
>
>
>
>You will have to do a slight algebraic formula such as:   x = the table's
>sale tax deduction amount for the appropriate income level and # of
>exemptions divided by .07 to figure out the gross sales amount used.  Then
>multiply .0225 times that gross sales amount ("x" that you calculated above)
>to add to the table's deduction amount for your total itemized deduction
>amount.
>
>
>
>Example:  For a Tennessee taxpayer with $25,000 and 2 exemptions, the sales
>tax deduction is $745.
>
>
>
>x = $745 divided by .07
>
>x = $10,642.86 Gross sales amount
>
>
>
>Now multiply the local sales tax rate:
>
>$10,642.86 times .0225
>
>= $239.46
>
>
>
>Total deduction = 745 + 239 = $984
>
>
>
>I hope this isn't too confusing. Call someone in the Math department if you
>need additional help.
>
>
>
>Julie
>
>
>
>Sales Tax Tables Now Available To Outline Taxpayer Savings
>posted December 21, 2004 on chattanoogan.com
>
>WASHINGTON, D.C. - As a result of a new law giving Tennesseans the option to
>deduct their sales tax, the Internal Revenue Service (IRS) has released a
>table to help taxpayers calculate their deductions.
>
>The "Optional Sales Tax Tables" were released last Friday by the IRS for
>taxpayers to use to calculate their sales tax deduction from their 2004
>federal tax returns. The tables give taxpayers a sales tax deduction amount
>as an alternative to saving their receipts throughout the year and
>calculating the amount they actually paid. Taxpayers who itemize can now add
>the state sales taxes they pay to their deductions. The tables provide
>specific deduction totals based on a taxpayer's income bracket and number of
>deductions. In addition, if a family purchased a car, recreational vehicle,
>truck or other motor vehicle, they would be able to deduct sales taxes paid
>on these purchases from their taxable income on top of the deduction listed
>in the table.
>
>"Well over half a million Tennessee families file itemized tax returns and
>as a result of this new law, this year they will begin to see greater
>savings," said Frist. "A Tennessee family of four making $45,000 a year can
>now deduct an additional $1,000 from their taxable income. This represents
>real savings put back in the pockets of Tennessee families. I'm pleased we
>were able to correct this inequity in the tax code which for too long has
>penalized Tennessee taxpayers. Since coming to the United States Senate,
>this was an issue that I fought hard to correct. I'm pleased that with the
>help of Lamar Alexander and other members of the Tennessee delegation we
>were successful this year in giving Tennessee families additional tax
>relief."
>
>On October 22, 2004, President Bush signed the "American Jobs Creation Act
>of 2004." This bill amended our nation's tax code to enable citizens to
>deduct state sales tax from their federal taxes. For nearly 20 years
>taxpayers in states like Tennessee that raise revenue through a state sales
>tax have been unable to deduct the sales taxes they have paid. Alaska,
>Florida, Nevada, South Dakota, Texas, Washington and Wyoming join Tennessee
>in benefiting from this change in the tax code.
>
>As Senate Majority Leader, Senator Frist worked hard to ensure that the
>state sales tax deductibility issue was a priority in the 108th Congress.
>
>The IRS table can be viewed on Senator Frist's website at
>www.frist.senate.gov.
>
>