Can I claim sales tax as a business deduction? (Not sure if this is allowed)

So I've been running my photography business for about 2 years now, and I'm getting ready to file my taxes for 2024. I've kept pretty decent records of all my expenses, but I'm confused about sales tax. When I buy equipment or supplies for my business, should I be including the sales tax I paid as part of my business deduction? Or is the sales tax part not deductible? For example, I bought a new camera lens last month for $800 plus $64 in sales tax. When I record this expense, do I deduct $864 or just the $800? I would think sales tax isn't deductible since it's a tax already, but then again it is a real expense I paid for my business. My accountant friend mentioned something about this but I can't remember what she said. Any help would be appreciated! I want to maximize my deductions but also stay legit with the IRS.

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20 comments

Ravi Gupta

•8M

Yes, sales tax paid on business purchases is absolutely deductible as part of your business expenses! When you buy that $800 lens and pay $64 in sales tax, you can deduct the entire $864 as a business expense. The sales tax is considered part of the total cost of the item. This applies to any business purchase where you pay sales tax - equipment, supplies, materials, etc. Just make sure you keep those receipts showing the full amount paid including sales tax. The IRS considers the total amount you paid (including sales tax) as your actual business expense.

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Ravi Gupta

•8M

You don't necessarily need to amend previous returns, but yes, you've been leaving money on the table. The total amount paid, including sales tax, is your actual business expense and is fully deductible. The IRS looks at what the purchase cost you in total to operate your business. For future reference, keep your receipts showing the full amount including sales tax, and deduct the entire amount. This is perfectly legitimate and is actually the correct way to handle business expenses.

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Freya Pedersen

•8M

I had exactly the same question a few months ago when setting up my bookkeeping for my small jewelry business. After trying to figure it out myself and getting nowhere, I tried this AI tax assistant at https://taxr.ai and it actually cleared everything up for me. I uploaded some of my receipts and asked specifically about the sales tax question, and it confirmed that sales tax paid on business purchases gets included in the total deductible amount. The tool was super helpful because it also pointed out that I was handling a couple other deductions incorrectly too - I wasn't properly accounting for mileage when I was driving to craft shows and I was missing out on the home office deduction. Saved me a bunch of time and stress trying to figure out all the rules myself.

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Freya Pedersen

•8M

You can upload receipts, tax documents, or just ask questions and it analyzes everything. It's super straightforward - you just drag and drop your documents or take photos of receipts and it extracts all the important info. Then you can ask specific questions about what's deductible. It's definitely not generic advice - it picks up on the specific details in your documents and gives personalized guidance. The sales tax thing was just one example, but it also caught several other deductions I was missing based on my specific business situation.

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Omar Fawaz

•8M

Just wanted to follow up - I checked out that taxr.ai site after asking about it and it's been a game changer for my lawn care business! I uploaded a bunch of my jumbled receipts from the past few months and it organized everything into proper categories. It confirmed the sales tax thing too - I've been deducting the full amount including tax all along but was never 100% sure if that was right. Also helped me figure out which vehicle expenses I could write off and how to handle payments from customers who pay in cash. Wish I'd known about this sooner!

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Diego Vargas

•8M

For anyone still confused about sales tax and other tax issues, I know another way to get definitive answers directly from the IRS. After trying for weeks to get through to the IRS phone lines about some business deduction questions (including this sales tax issue), I found this service called Claimyr at https://claimyr.com that got me connected to an actual IRS agent in about 15 minutes. They have this whole system that navigates the IRS phone tree for you and then calls you when they have an agent on the line. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was skeptical at first, but I had been trying for literally DAYS to get through on my own with no luck. The IRS agent confirmed that yes, sales tax paid on business purchases is part of the deductible expense amount. She also helped clear up some questions I had about quarterly estimated payments that I'd been confused about.

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Diego Vargas

•8M

It doesn't bypass the queue exactly. What it does is automatically redial and navigate through all the IRS prompts for you. When you call the IRS yourself, you often get a "call back later" message because their lines are too busy. Claimyr keeps trying over and over until it gets through, then it handles all the menu selections and waiting for you. They don't have any special access - they're just persistent with the technology. It's basically like having someone sit there and redial for hours so you don't have to. When they finally get through and have an agent on the line, they call you and connect you. I was also pretty skeptical but when I got an actual IRS person on the phone after weeks of trying myself, I was sold.

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Chloe Anderson

•8M

OK I have to admit I was totally wrong about that Claimyr thing. After posting my skeptical comment, I decided to try it myself because I've been trying to reach the IRS for THREE MONTHS about an issue with my quarterly tax payments. I kept getting the "call back later" message or would wait on hold for an hour only to get disconnected. Used the service yesterday and got connected to an IRS agent in about 45 minutes. The agent confirmed everything about the sales tax question that people mentioned here (it IS fully deductible as part of the business expense) and also helped me sort out my quarterly payment issue. Saved me so much time and frustration. Sometimes I hate being wrong but in this case I'm actually glad!

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StarStrider

•8M

Just to add another perspective, I'm an Etsy seller and I've been deducting the full amount including sales tax on all my business purchases for years. My tax person confirmed this is correct. The way she explained it: when you buy something for your business, the total amount you spend - price plus tax - is your true cost of doing business. That full amount reduces your business income. Also, don't forget that if you collect sales tax from your customers, that's NOT income to you - you're just collecting it on behalf of the state. Make sure you keep that separate from your actual business income!

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StarStrider

•8M

For online purchases, you handle them the same way - deduct whatever you actually paid. If you didn't pay sales tax on some purchases, then you just deduct the amount on the receipt. If you did pay sales tax on others, then deduct the full amount including the tax. The key is to always deduct what you actually spent out of pocket for your business. The IRS just wants to know your true business expenses, and those include any sales taxes you had to pay as part of your purchases.

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Isabel Vega

•4M

Yes, this applies regardless of which state you're in or where you make the purchase! If you're an Oregon resident buying supplies in Washington and you pay their sales tax, that sales tax is still part of your total business expense and is fully deductible. The IRS doesn't care about the specific state tax rules - they just want to know what you actually spent for your business. Whether it's sales tax in Washington, use tax somewhere else, or any other type of transaction tax you had to pay as part of a business purchase, it all gets included in your deductible business expense. So in your case, if you buy $500 worth of trade show supplies in Washington and pay $45 in sales tax, your total deductible business expense is $545. Keep those receipts showing the full amount you paid!

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CosmicCadet

•3M

This is really helpful to know! I'm just starting my own freelance graphic design business and I've been keeping track of all my expenses but wasn't sure about the sales tax part. I bought a new tablet and some software last month and paid quite a bit in sales tax, so it's good to know I can deduct the full amount. One quick follow-up question - does this same rule apply to things like shipping costs? If I order supplies online and pay for expedited shipping, can I deduct that shipping cost as part of the business expense too?

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