And if you think the IRS deduction tables are too stingy, don't automatically rule out totaling up your receipts, even if you don't have every single one from January through December 2008. "If you made large expenditures, you might find you still have enough to use instead of the tables," says Scharin.
Some scenarios involving costly and taxable expenditures could produce a hefty deduction.
Scenarios involving costly and taxable expenditures:
- You bought lots of electronic equipment.
- You moved to your first or a new home and furnished it.
- You bought expensive jewelry, such as an engagement ring.
- You paid for the wedding that followed that ring purchase.
"You're more likely to have kept receipts for these items for insurance purposes or because they were mind-boggling," says Scharin. "Basically, you're looking for spending that's disproportionate to your income. The tables are only looking at your income and the average amount spent by people making that much."
Just what is a sales tax?
Finally, there's the issue of just what constitutes a state sales tax. Your monthly cell phone bill includes numerous service charges; do at least a portion of these added phone fees count as deductible sales taxes? Unfortunately no, says Bankrate.com's tax adviser George Saenz. The Miami-based CPA notes that while many states impose a sales tax (often at a higher rate) on communications such as mobile phones, it's not a general sales tax because it doesn't apply to a broad range of products at a similar rate.Also, says tax attorney Abrams, these bills include several layers of taxes. "The federal government governs the airways and cell phones have federal taxes, FCC charges. Federal taxes are never deductible."
And some states apply sales taxes to utilities, such as electricity or cable services. Again, if you're planning on deducting these costs, check with your state tax officials to make sure the amounts are the same as the state's general sales tax rate.
Most taxpayers, however, are probably not going to worry about these extra taxes and fees and tracking down year-old receipts. They'll likely opt instead to use the sales tax tables, especially because they provide some tax relief for relatively little effort.
"The tables are based on your income level, and built into that is your ability to spend," says Abrams. "There's probably not going to be that much of a difference between the tables and receipts."