Quote Originally Posted by GeorgiaGal View Post
Actually, there is no loop hole. It's very simple. Any one filing a return who can itemize may elect to deduct sales tax instead of state income tax.

This is a benefit for people who live in states where there is no state income tax.

I think you would be hard pressed to find someone who is required to pay state income tax, whose sales tax deduction would be higher than the state tax deduction.

It's possible though. Let's say a self-employed person did not file his state tax return for 2005 in 2006, and he did not make any estimated state tax payments in 2006. He prepares his 2006 federal return, and is able to itemize because of large home loan interest. Since he did not pay any state income tax in 2006, he could take advantage of the sales tax deduction.

This and other examples would be rare, IMHO. As a general rule, it is the state income tax deduction along with the home interest that bumps you into being able to itemize.

GA
Great info... Would like to start tracking them here on Guam. We have no state tax here.... Oh I forgot, we are not even a state hehehhehhe....
P