Harlan Lunsford wrote:
- quote -

1986 and prior years even had a separate line for sales/use
taxes on Schedule A.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Herb Smith wrote:
- quote -

Why? Be CAUSE..... my reply above JUST now appeared in
the newsgroup! And I agree, the original tenor or the OP has
been long lost. I'm wondering now, just how my reply just
now got registered by Dick's software?

- quote -

Well of course they were, all the way back to the fifties,
as I remember personally.

ChEAr$,
Harlan Lunsford, EA n LA

Moderator:
Your reply got lost in USENET somewhere and is just hitting
some servers now.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Harlan Lunsford wrote:
- quote -

As I read it, the 2004 1040 Instructions (page A-2)
specifically states that "compensating use taxes" can be
included by those who choose to deduct actual sales taxes on
Schedule A, line 5.

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Harlan Lunsford wrote:
- quote -

My newsreader doesn't show the original post but it seems to
me the OP is asking why the use tax was added to the refund
on the 1099G.

If the client reported the use tax on the state income tax
return and the tax itself was added to the income tax before
figuring the refund, then the combined total is correctly
reported on the 1099G. In fact, what happened was that a
portion of the refund was used to pay the use tax. If the
client had not had the use tax, the refund would have been
larger.

It is the excess of tax payments over the income tax
liability that is reportable. Just because a portion of
that excess is used to pay another tax doesn't change that
fact. If it had been applied to the next year's estimated
tax, there would have been no cash refund but the
overpayment would still be reported on the 1099G.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

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Harlan Lunsford wrote:
- quote -

Harlan, Why are you resurrecting a thread that is more than
18 months old, and has been superceded by tax law changes in
2005 and 2006?

As to the deductibility of sales and use taxes, they were
deductible in the '70s and up to about 1986 (I believe). I
remember spending way too much time tracking and adding up
all my purchases for the year, just to gain a little more
itemized deduction!!!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Herb Smith wrote:
- quote -

Oh? Was it ever? and if so, when?

Cheer$,
Harlan Lunsford, EA n LA

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Herb Smith wrote:
- quote -

Disregard the above. I was thinking strictly of use tax,
and not what you were considering, i.e. that use tax is just
another form of sales tax"... Of course I remember that!
lol

Cheer$,
Harlan Lunsford, EA n LA
winding down after a stressful week.
well, no; not stressful; just busy

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Catherine White wrote:

- quote -

The use tax does not affect the state income tax refund
reportable. With $800 in pocket, his state income tax
refund would have been $1000, with $200 taken for the use
tax. It sounds as if the 1099-G is correct.

- quote -

Asked and answered: NO. Repealed in 1986.

- quote -

No. The 1099-G only reflects the income tax. The check
reflects both taxes.

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Catherine White wrote:

- quote -

The sales/use tax deduction was repealed in 1986.

Applying IRC Section 111, his refund of use tax will not be
taxable if he was unable to deduct it (including through
depreciation since it is now capitalized as part of basis of
the item "used").

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Catherine White wrote:

- quote -

Nope. As pointed out above, use tax is same as sales tax,
therefore not deductibe on schedule a since 1986.

- quote -

Again no. Ask yourself, it he had NOT confessed to the
200$, what would have been his true refund?

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

No. As several other people have already stated, you cannot
deduct use tax.

- quote -

No, the state did not mess up. Based on the details you
gave, your statement that "He got a refund from CT of $800
total" is not correct. He got a REFUND of $1000 total. That
was his state INCOME tax overpayment: the difference between
the amount of state INCOME tax he paid and the amount he
owed. He got a CHECK for $800. He used the other $200 of his
refund to pay the USE tax, which is a separate tax (even
though it's on the same form). That use tax is not a
deductible expense. It's the same as if he had gotten a
check for his entire $1000 income tax refund, then written a
check to pay the $200 use tax. The 1099-G is correctly
reporting the amount of his total state INCOME tax refund.

The illustration that Phoebe Roberts gave in her earlier
reply shows how this works, but the numbers are different
because she didn't know the actual amounts at the time.

Bob Sandler
not a tax professional

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Catherine White <cgwhite12[at]rcn.com> writes:

- quote -

No. It's sales tax in nonresident's clothing.

- quote -

No. The 2002 Schedule A income tax deduction would have
been for the entire amount paid in 2002. That was $1,000
too much. Thus, there's $1,000 2003 income on the 1040.
Instead of thinking about the $200 as use tax paid, think of
it as delinquent child support withheld from the refund.

Phil Marti
Topeka, KS

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Hi again folks; here's (I hope) some clarification.
Again, this is what I've been told by my friend -- I haven't
seen the paperwork myself.

Her client lives in Connecticut. In CT apparently, (as in
MA for the past couple of years) there is a line on the
income tax form asking for use tax amounts for out-of-state
purchases by consumers during the year.

This gentleman had $200 of use tax in 2002. He got a refund
from CT of $800 total. His 1099-G that he received this
month had $1000 as the amount reported.

It sounded to me like CT got the 1099 wrong. My friend was
concerned (because the number was so perfectly his refund
PLUS his use tax) that they were adding them together
because he "should" have subtracted his use tax amount
(which was for 2002 and did reduce his refund) on his
Federal Schedule A for 2002. While that (deducting from
Scch A) may well be so (it was another tax due to his state
and did affect his refund), I don't see why his 1099-G would
show the amount included.

So I gues there are really two questions:

1. Does Use Tax due to a state get deducted on Schedule A?
(This is a new bit to look for in MA; it was only added to
our income tax form last year.)

2. Did CT mess up on this 1099-G by adding the use tax
amount to the refund amount and not giving the dollar amount
of the check they actually sent out?

Thanks.
Catherine

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Catherine White <cgwhite12[at]rcn.com> wrote:

- quote -

Consumer use tax here in the state of Louisiana is
considered sales tax paid on items you have purchased online
or out of state. This use tax is a voluntary act on your
part to report every year on your Louisiana state tax
return. Sales taxes are non deductable on Federal tax
return.

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"Catherine White" <cgwhite12[at]rcn.com> wrote:

- quote -

I think not unless he is self-employed.

Wayne Brasch, CPA, M. S. Taxation

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Catherine White <cgwhite12[at]rcn.com> wrote:

- quote -

"Use Tax" is just another form of sales tax, usually on
items purchased out-of-state, and IS NOT deductible on the
federal tax return. Hasn't been deductible for many years.

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Catherine White wrote:

- quote -

Is this the scenario you're describing? Client paid $1,000
of state withholding tax Client had $750 of income tax
liability and $50 of use tax liability, for a total
liability of $800

State refunded $200
1099-G shows $250 refunded

If so, then what "really" happened was:
Client paid $1,000 of state withholding tax
Client had $750 of income tax liability
State refunded $250
Client had $50 of use tax liability
Client paid state $50
Client nets $200

In this scenario, the 1099-G should obviously be for $250.

No deduction for use tax, in any case.

Phoebe

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Catherine White <cgwhite12[at]rcn.com> writes:

- quote -

No. Use tax isn't deductible and refunds of it aren't
income.

Phil Marti
Topeka, KS

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Catherine White wrote:

- quote -

It sounds to me like the state added the income tax and the
use tax, compared the total to the amount withheld or paid
as estimates, and refunded the difference. If so, the
1099-G would be the total of the amount received and the use
tax paid.

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Catherine White wrote:

- quote -

Could you clarify please? Use tax is "usually" paid on a
monthly or quarterl basis directly to state sales tax
department. Or in case of a consumer, it might be added to
the income tax if that state has such a line on it's own
income tax return. which is it?

If the latter, the 1099-G only indicates a refund of income
tax, but if that's after his having added use tax after the
income tax, the refund amount should be increased by the
amount of the use tax which he confessed on the return.

cheer$,
Harlan Lunsford, EA n LA

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