• You must file form 1040 to claim sales tax.tax forms image by Chad McDermott from Fotolia.com
  
  The Internal Revenue Service permits taxpayers to decide between claiming the standard deduction or being allowed to claim a number of itemized tax deductions. For taxpayers who elect to forgo the standard deduction, state and local sales taxes paid throughout the year can be deducted from their taxable income. The IRS has two methods for determining the sales-tax deduction.
  
  

Calculating Your Deduction

• The IRS allows taxpayers to use one of two methods to calculate their sales-tax deduction. The first method allows taxpayers to figure their deduction by adding all of their sales taxes paid throughout the year. In order to use this method, the taxpayer must be able to show receipts that add up to the deduction claimed. This method typically results in a larger deduction for taxpayers who made a major purchase during the year, such as a new car. The second method involves using the taxpayer's income, number of exemptions claimed and the sales tax tables in the Schedule A instructions. The taxpayer uses the tables for his state or locality to determine the deduction. This method does not require the taxpayer to provide documentation of his sales taxes paid.
  
  

Multiple States

• If you lived in multiple states during the year and use the second method of calculating your sales-tax deduction, you must calculate your deduction based on the percentage of the year that you lived in each location. For example, if you lived in State A for 70 percent of the year and State B for 30 percent of the year, you would first calculate your deduction if you lived the entire year in each state. Then you would multiply your sales-tax deduction for the entire year from state A by 0.7 and your sales deduction for the entire year from state B by 0.3 and add the results to calculate your total deduction.
  
  

Reporting the Deduction

• The sales-tax deduction can only be claimed by people who itemize their tax deductions. In order to itemize deductions, taxpayers must file their tax return using form 1040 and complete Schedule A. On Schedule A, taxpayers report the sales-tax deduction on line 5 and must check the box on line 5b, "General sales taxes," to indicate that the deduction being claimed is for sales taxes not income taxes. You cannot claim both state and local income taxes and state and local sales taxes in the same year.