Using my own sales tax calculation is 5x higher than IRS calculator estimate - will this trigger an audit red flag?

Thanks for the detailed response. I appreciate the reassurance. Just to clarify, if I do get audited, would my bank statements be sufficient proof? Or do they expect actual receipts showing the sales tax line item? Also, does the IRS look at the ratio between income and sales tax claimed, or just the absolute amount?

Bank statements alone might not be sufficient since they don't typically show the tax portion separately. What you've done with your tool provides a reasonable basis, and in an audit, the IRS looks for reasonable substantiation, not necessarily perfect documentation. If possible, keep receipts for major purchases going forward. The IRS typically examines both the absolute amount and how it relates to your income. Their system flags returns that substantially deviate from norms for your income level. However, if you can explain why your situation is different (like making several large purchases), your substantiation method should provide reasonable support for your claim.

Does taxr.ai work with downloaded bank statements or do you have to connect your accounts directly? I'm hesitant to give access to my financial accounts to third-party tools.

I'm skeptical about these tax tools. How is this different from what the original poster already did with their homemade tool? And how would this help if the IRS demands actual receipts showing the sales tax amounts?

You can upload downloaded statements without connecting your accounts directly. They have a secure document upload feature that works with PDFs and CSV files from most major banks. Privacy was a big concern for me too. The difference from a homemade solution is that it uses IRS-recognized methodologies for calculating estimated sales tax when receipts aren't available. It creates an audit trail with documentation that follows accepted tax preparation standards, showing how calculations were performed using recognized methods. The system also identifies which transactions might need additional substantiation and provides guidance on record keeping for those specific purchases.

How exactly does this service work? Do they just keep calling the IRS for you or something? Seems weird that you'd need a third party just to talk to the government.

Yeah right. The IRS phone system is deliberately designed to be impossible to navigate. I find it hard to believe any service could actually get through when millions of taxpayers can't. Sounds like a scam that takes your money and delivers nothing.

They use an automated system that navigates the IRS phone tree and holds your place in line. When it detects that an agent is about to pick up, it calls you and connects you directly to that agent. It's not that they have special access - they're just using technology to handle the most frustrating part (the endless waiting and disconnections). I was skeptical too, but the IRS phone system isn't deliberately impossible - it's just overwhelmed and underfunded. This service basically automates the persistence needed to get through. I wasted hours trying on my own before using it. When I finally spoke to the agent, she was actually really helpful about my sales tax documentation questions.

Thank you for sharing your experience! It's reassuring to hear from someone who's been doing this for years. I'm curious, do you use any particular method to estimate the sales tax percentage on your credit card statements? My state has different rates for different categories (food vs general merchandise), and I'm wondering how detailed I need to be.

I use a weighted average approach. I take my state's general sales tax rate (which is 8.25% in my case) and apply it to most purchases. For food items, I use our reduced rate of 2%. For my estimation, I categorize my spending into these buckets and apply the appropriate rate to each. I keep a simple spreadsheet with my methodology clearly documented. For big purchases like my washer/dryer last year, I have the actual receipt with the exact tax amount. The key is showing you made a good-faith effort to be accurate rather than just making up numbers. Your approach with the tool to analyze your statements sounds even more sophisticated than mine!

Tax preparer here (though not yours, obv). Sales tax deductions alone rarely trigger audits, but they can contribute to your overall "DIF score" which the IRS uses to flag returns. In 12 years of practice, I've seen maybe 3-4 clients questioned specifically about sales tax, and all were cases where the amount exceeded 15% of their AGI.

This is really helpful to see someone else in a similar situation! I'm also in a no-income-tax state and have been stressed about the same thing. Your point about life events making spending different from statistical averages really resonates - I had some unexpected home repairs this year that definitely pushed my sales tax way above normal. Quick question: when you mention applying different tax rates by category, how granular do you get? Do you separate out things like restaurant meals vs grocery purchases, or do you keep it more general? I'm trying to find the right balance between accuracy and not overcomplicating my documentation. Also appreciate the reassurance about the charitable donation being separate - I was worried the IRS would see both unusual items and get suspicious, but it sounds like each deduction is evaluated on its own merits.

I keep it fairly general to avoid overcomplicating things. I use three main categories: general merchandise (8.25%), groceries (2% - most food items are taxed at a reduced rate in Texas), and restaurant meals (8.25%). For big purchases like your HVAC system, I keep the actual receipts since those are easy audit targets. The key is consistency - whatever method you choose, stick with it and document it clearly. I actually created a simple one-page summary explaining my methodology that I keep with my tax records. It shows the tax rates I used, explains why I categorized things the way I did, and references the Texas Comptroller's website for the official rates. You're absolutely right that each deduction stands on its own. The IRS systems are looking for patterns and outliers, but a legitimate charitable donation with proper documentation won't make your sales tax deduction more suspicious. If anything, it shows you're someone who keeps good records and follows the rules properly. For what it's worth, my tax preparer said the combination of good documentation and reasonable methodology is usually sufficient even if questioned. The IRS isn't expecting perfection - they're looking for good faith efforts to report accurately.