Tax Deduction For Small Business
How to save Tax |
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You have the option of taking either a sales tax deduction or a deduction of state and local income taxes. We start by looking at an IRS estimate of what you paid in sales tax for the year (its based on your income). Your estimated sales tax deduction is already larger than your state and local income tax deduction, and you may benefit even more by entering your local sales tax rate and any sales tax paid on vehicles purchased or on materials purchased for building or remodeling your home. This would increase the amount of sales tax you can deduct. Why sometimes consider Smaller Deduction?Everybody wants to pay the lowest possible income tax, so would not want to take the largest possible deduction? Most of the time, you will take the largest deduction. However, if you receive a refund of state and local taxes this year, and take a state and local tax deduction, will have to include the refund in your taxable income next year. If your refund is large, this could cause you to be in a higher tax bracket, or, if you receive Social Security benefits, may cause you to include more of your benefits in taxable income. By deducting sales tax, will not have to include your refund in income next year. |
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