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Lacerte > 05Tax > Individual > US > Schedule A

Several changes have been made with respect to the calculation of the state and local sales tax deduction when using the optional sales tax tables, which are now provided in Federal Schedule A instructions.

California State Changes:
The base state sales tax rate used by the IRS to create tables for the state of California is now 7.25%, which includes the state base rate of 6.25% plus a 1% uniform local rate that is applied to all localities. Since last year's table for the state of California used 6.1% for its base (a blended rate that did not include local sales tax rates), the entry in the "Local Sales Tax Rate (.xxxxxx)" tax return option will be decreased by .0115 when you transfer prior year settings from the 2004 tax program, but only if your preparer file indicates that your firm is a California firm. In the event that you have multiple firm files, the program will perform the same reduction if any firm indicates a California location. Therefore, the rate transferred should be verified for accuracy prior to processing 2005 tax returns. If in 2004, you overrode the local sales tax rate by using "Local rate (for computing local taxes) (.xxxxxx)" (Screen 25, code 501) on a California resident, the entry is decreased by .0115 during the proforma process.

Virginia State Changes:
The base state sales tax rate used by the IRS to create tables for the state of Virginia is now 5%, which includes both the state and local sales tax rates. Since last years table for the state of Virginia used 3.7% for it’s base, the entry in the ‘Local Sales Tax Rate (.xxxxxx)’ tax return options will be decreased by .013 when you transfer prior year settings from the 2004 tax program, but only if your preparer file indicates that your firm is a Virginia firm. In the event that you have multiple firm files, the program will perform the same reduction if any firm indicates a Virginia location. Therefore, the rate transferred should be verified for accuracy prior to processing 2005 tax returns. If in 2004 you overrode the local sales tax rate by using "Local rate (for computing local taxes) (.xxxxxx)" (Screen 25, code 501) on a Virginia resident, the entry is decreased by .013 during the proforma process.

Salem County, New Jersey:
According to Page A-11 of the 2005 Schedule A instructions, residents of Salem County, New Jersey should only deduct one-half of the amount in the New Jersey state table. The program determines if the taxpayer is a resident of Salem County, New Jersey based on the ZIP code entry in Client Information.

Other Locality Changes:
For tax year 2005, the local sales tax deduction is computed differently for residents of Alaska, Arizona, Arkansas (Texarkana only), California (Los Angeles County only), Colorado, Georgia, Illinois, Louisiana, New York (New York City only), or North Carolina. Residents of these locations are provided with local sales tax tables in the Schedule A instructions, in which a local sales tax deduction is provided, based on a rate of 1%. The amount derived from the table is multiplied by the local tax rate to arrive at the local sales tax deduction. As an example, if the table amount for one of these localities is $100, and the local tax rate is 2%, the local sales tax deduction is computed as $200 ($100 x 2). Below is the list of the impacted states and localities, and how the program determines which table to use.

Alaska, Arizona, Georgia, Louisiana, North Carolina:
If the taxpayer's "Resident State as of 12/31" is Alaska, Arizona, Georgia, Louisiana, or North Carolina, the program automatically uses the IRS Optional Local Sales Tax table A, B, or C, whichever applies.

Arkansas:
If the taxpayer's "Resident State as of 12/31" is Arkansas, the program uses Optional Local Sales Tax Table B, only if the "City" field in Client Information reads Texarkana.

California:
If the taxpayer's "Resident State as of 12/31" is California, the program uses Optional Local Sales Tax Table B, only if the "ZIP Code" field in Client Information is a Los Angeles County ZIP code.

Colorado:
If the taxpayer's "Resident State as of 12/31" is Colorado, and the "City" field in client information reads Aurora, Greeley, Longmont, or Pueblo, the program uses Optional Local Sales Tax Table B. If the "City" field in client information reads Arvada, Boulder, Fort Collins, Lakewood, Thornton, or Westminster, the program uses Optional Local Sales Tax Table C. For all others, the program uses Optional Local Sales Tax Table A.

Illinois:
If the taxpayer's "Resident State as of 12/31" is Illinois, and the "City" field in client information reads Arlington Heights, Aurora, Bloomington, Champaign, Chicago, Cicero, Decatur, Elgin, Evanston, Joliet, Palatine, Peoria, Schaumburg, Skokie, Springfield, or Waukegan, the program uses Optional Local Sales Tax Table B. For all others, the program uses Optional Local Sales Tax Table A.

New York:
If the taxpayers "Resident State as of 12/31" is New York, the program uses Optional Local Sales Tax Table B, only if the "NYC/Yonkers Resident field" in Client Information is set to "NYC \Full Year", or if the entry in the "City Resident To" input field in the New York Change of City Resident Status screen is 12/31/05 (Screen 54, code 3).

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