Several tax breaks are on the books for 2011 but may be gone next year unless they are extended by Congress. One of those is the option to deduct state and local sales and use taxes instead of state and local income taxes.
- What it is: Currently, taxpayers have the ability to deduct, as an itemized deduction, either State and Local sales tax or State and Local income tax.
- Who it applies to: Although this deduction usually applies to our snow birds that have moved their residency to Florida, Nevada, Texas, or other states with no income tax, it also may apply to retired taxpayers.
- Benefit: State and Local income tax is an alternative minimum tax addback, whereas State and Local sales tax is not.
- What you can do if this applies to you: Accelerate big ticket purchases into 2011.
If you feel this situation applies to you, post a comment below or contact our Tax Planning & Preparation Group to review your individual tax position.