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Feb 19, 2024, 2:53:13 PMFeb 19

to

(1) The instructions, page A-4, say

"Your 2023 income [for purposes of the optional sales tax tables] is

the amount shown on your Form 1040 or 1040-SR, line 11, plus any

nontaxable items, such as ... Nontaxable part of IRA, pension,

or annuity distributions. Don't include rollovers."

The sales tax calculator <irs.gov/SalesTax> has similar language.

Qualified Charitable Distributions are nontaxable IRA distributions.

Should I include them as income for the calculator or the tables?

(2) Separate question but related: Based on a trial run with the

calculator, I see that the calculator does not apply the sales tax

rate (8% last year, in my case) to total income but only to a

fraction of income. Does anyone know whether it is a fixed percentage

or variable with income, and how it is determined?

--

Stan Brown, Tehachapi, California, USA https://BrownMath.com/

Shikata ga nai...

--

<< ------------------------------------------------------- >>

<< The foregoing was not intended or written to be used, >>

<< nor can it used, for the purpose of avoiding penalties >>

<< that may be imposed upon the taxpayer. >>

<< >>

<< The Charter and the Guidelines for submitting posts >>

<< to this newsgroup as well as our anti-spamming policy >>

<< are at www.asktax.org. >>

<< Copyright (2011) - All rights reserved. >>

<< ------------------------------------------------------- >>

"Your 2023 income [for purposes of the optional sales tax tables] is

the amount shown on your Form 1040 or 1040-SR, line 11, plus any

nontaxable items, such as ... Nontaxable part of IRA, pension,

or annuity distributions. Don't include rollovers."

The sales tax calculator <irs.gov/SalesTax> has similar language.

Qualified Charitable Distributions are nontaxable IRA distributions.

Should I include them as income for the calculator or the tables?

(2) Separate question but related: Based on a trial run with the

calculator, I see that the calculator does not apply the sales tax

rate (8% last year, in my case) to total income but only to a

fraction of income. Does anyone know whether it is a fixed percentage

or variable with income, and how it is determined?

--

Stan Brown, Tehachapi, California, USA https://BrownMath.com/

Shikata ga nai...

--

<< ------------------------------------------------------- >>

<< The foregoing was not intended or written to be used, >>

<< nor can it used, for the purpose of avoiding penalties >>

<< that may be imposed upon the taxpayer. >>

<< >>

<< The Charter and the Guidelines for submitting posts >>

<< to this newsgroup as well as our anti-spamming policy >>

<< are at www.asktax.org. >>

<< Copyright (2011) - All rights reserved. >>

<< ------------------------------------------------------- >>

Feb 19, 2024, 6:18:59 PMFeb 19

to

>(2) Separate question but related: Based on a trial run with the

>calculator, I see that the calculator does not apply the sales tax

>rate (8% last year, in my case) to total income but only to a

>fraction of income. Does anyone know whether it is a fixed percentage

>or variable with income, and how it is determined?

It is not a fixed percentage. It uses the state sales tax
>calculator, I see that the calculator does not apply the sales tax

>rate (8% last year, in my case) to total income but only to a

>fraction of income. Does anyone know whether it is a fixed percentage

>or variable with income, and how it is determined?

tables in the Schedule A instructions, pages A-13 - A-16,

for the state you are in. The tables are in steps or

brackets. For example, the amount of sales tax is the same

for any income amount from $60,000 to $69,999.

Bob Sandler

Feb 19, 2024, 9:29:16 PMFeb 19

to

On Mon, 19 Feb 2024 18:15:59 EST, Bob Sandler wrote:

>

> >(2) Separate question but related: Based on a trial run with the

> >calculator, I see that the calculator does not apply the sales tax

> >rate (8% last year, in my case) to total income but only to a

> >fraction of income. Does anyone know whether it is a fixed percentage

> >or variable with income, and how it is determined?

>

> It is not a fixed percentage. It uses the state sales tax

> tables in the Schedule A instructions, pages A-13 - A-16,

> for the state you are in. The tables are in steps or

> brackets. For example, the amount of sales tax is the same

> for any income amount from $60,000 to $69,999.

Thanks, Bob. But I don't think it uses the tables, or at least not
>

> >(2) Separate question but related: Based on a trial run with the

> >calculator, I see that the calculator does not apply the sales tax

> >rate (8% last year, in my case) to total income but only to a

> >fraction of income. Does anyone know whether it is a fixed percentage

> >or variable with income, and how it is determined?

>

> It is not a fixed percentage. It uses the state sales tax

> tables in the Schedule A instructions, pages A-13 - A-16,

> for the state you are in. The tables are in steps or

> brackets. For example, the amount of sales tax is the same

> for any income amount from $60,000 to $69,999.

only the tables. When I used the calculator, it gave me a deduction

of $x,xxx.36, but the tables are in whole dollars.

Presumably there's some kind of formula, and the tables round the

result to whole dollars but the calculator only to the nearest penny.

I'm trying to find the formula, so that I can put it into the

spreadsheet I use to track my projected total tax during the year, so

that I can make adequate estimated payments each quarter. (Yes, I

know that there's a $1,000 margin of error, but I like to be as

accurate as possible.)

Feb 19, 2024, 10:34:16 PMFeb 19

to

>Thanks, Bob. But I don't think it uses the tables, or at least not

>only the tables. When I used the calculator, it gave me a deduction

>of $x,xxx.36, but the tables are in whole dollars.

>

>Presumably there's some kind of formula, and the tables round the

>result to whole dollars but the calculator only to the nearest penny.

>I'm trying to find the formula . . .
>only the tables. When I used the calculator, it gave me a deduction

>of $x,xxx.36, but the tables are in whole dollars.

>

>Presumably there's some kind of formula, and the tables round the

>result to whole dollars but the calculator only to the nearest penny.

It is probably calculating an adjustment because the local

tax rate in Tehachapi is higher than the minimum local tax

rate that is built into the table. See Note 3 in the box at

the bottom of page A-16 in the instructions. You would have

to use the worksheet on page A-5 and see the instructions

for line 3 of the worksheet on page A-6.

While digging into this, I ran across an article in the

Tehachapi News saying that the tax rate was going to

increase on April 1, 2023. If that happened, the calculator

is probably doing an apportionment to account for the

mid-year increase. I assume it would be similar to what you

would do if you moved to a different city during the year.

See "What if you lived in more than one locality in the same

state during 2023?" in the middle column on page A-6. You

would have to do separate worksheets for the first 3 months

and the last 9 months.

"Currently, the sales tax rate within the city of Tehachapi

is 7.25 percent but it will increase to 8.25 percent on

April 1, 2023 . . ."

https://www.tehachapinews.com/news/article_c0651a62-8331-11ed-ae47-63de4e16fc48.html

My earlier post was based on testing the calculator using my

own state, which has a uniform state-wide sales tax rate,

and no local sales taxes.

Bob Sandler

Feb 20, 2024, 7:48:03 PMFeb 20

to

> It is probably calculating an adjustment because the local

> tax rate in Tehachapi is higher than the minimum local tax

> rate that is built into the table. See Note 3 in the box at

> the bottom of page A-16 in the instructions. You would have

> to use the worksheet on page A-5 and see the instructions

> for line 3 of the worksheet on page A-6.

Yes, the tax rate in Tehachapi as well as unincorporated Kern County
> tax rate in Tehachapi is higher than the minimum local tax

> rate that is built into the table. See Note 3 in the box at

> the bottom of page A-16 in the instructions. You would have

> to use the worksheet on page A-5 and see the instructions

> for line 3 of the worksheet on page A-6.

rose to 8.25% from 7.25% on 2023-04-01. The IRS sales tax calculator,

in its summary page, quoted a rate of 7.2500% + 0.7534%, the latter

figure being a pro rating of the 1% increase over 295/365ths of the

year. Thus the effective rate last year was 8.0034%, taking into

account the partial-year increase. In my initial query I rounded that

to 8% for simplicity's sake.

I had no issue with the tax rate, and I've snipped your discussion.

As a reminder, here again are the two questions I asked originally.

I'd be grateful for answer from you or anyone to these questions.

On Mon, 19 Feb 2024 14:52:04 EST, Stan Brown wrote:

> (1) The instructions, page A-4, say

> "Your 2023 income [for purposes of the optional sales tax tables] is

> the amount shown on your Form 1040 or 1040-SR, line 11, plus any

> nontaxable items, such as ... Nontaxable part of IRA, pension,

> or annuity distributions. Don't include rollovers."

> The sales tax calculator <irs.gov/SalesTax> has similar language.

>

> Qualified Charitable Distributions are nontaxable IRA distributions.

> Should I include them as income for the calculator or the tables?

>

> (2) Separate question but related: Based on a trial run with the

> calculator, I see that the calculator does not apply the sales tax

> rate (8% last year, in my case) to total income but only to a

> fraction of income. Does anyone know whether it is a fixed percentage

> or variable with income, and how it is determined?

The question here is not about the tax rate, but about what portion
> calculator, I see that the calculator does not apply the sales tax

> rate (8% last year, in my case) to total income but only to a

> fraction of income. Does anyone know whether it is a fixed percentage

> or variable with income, and how it is determined?

of income the tax rate gets applied to.

Feb 20, 2024, 10:33:32 PMFeb 20

to

>As a reminder, here again are the two questions I asked originally.

>I'd be grateful for answer from you or anyone to these questions.

>

>On Mon, 19 Feb 2024 14:52:04 EST, Stan Brown wrote:

>> (1) The instructions, page A-4, say

>> "Your 2023 income [for purposes of the optional sales tax tables] is

>> the amount shown on your Form 1040 or 1040-SR, line 11, plus any

>> nontaxable items, such as ... Nontaxable part of IRA, pension,

>> or annuity distributions. Don't include rollovers."

>> The sales tax calculator <irs.gov/SalesTax> has similar language.

>>

>> Qualified Charitable Distributions are nontaxable IRA distributions.

>> Should I include them as income for the calculator or the tables?

That's an interesting question. I haven't responded to that
>I'd be grateful for answer from you or anyone to these questions.

>

>On Mon, 19 Feb 2024 14:52:04 EST, Stan Brown wrote:

>> (1) The instructions, page A-4, say

>> "Your 2023 income [for purposes of the optional sales tax tables] is

>> the amount shown on your Form 1040 or 1040-SR, line 11, plus any

>> nontaxable items, such as ... Nontaxable part of IRA, pension,

>> or annuity distributions. Don't include rollovers."

>> The sales tax calculator <irs.gov/SalesTax> has similar language.

>>

>> Qualified Charitable Distributions are nontaxable IRA distributions.

>> Should I include them as income for the calculator or the tables?

because I don't know the answer. I was hoping someone else

would respond who knows the answer.

>> (2) Separate question but related: Based on a trial run with the

>> calculator, I see that the calculator does not apply the sales tax

>> rate (8% last year, in my case) to total income but only to a

>> fraction of income. Does anyone know whether it is a fixed percentage

>> or variable with income, and how it is determined?

>

>The question here is not about the tax rate, but about what portion

>of income the tax rate gets applied to.

specific fraction of income. It just doesn't work that way.

You are resisting using the table in the instructions, but

the calculator uses the table, not a formula. Built into the

table is an assumption about how much of your income is used

to make purchases that are subject to sales tax. I don't

know precisely how they determine that, but that assumption

is not based on a formula. It's based on what items are

subject to sales tax in each state, and studies of what

people buy. It will be different in each state. What people

buy will vary with income, but it's probably based on

surveys and studies, not a formula.

For local tax, if you work through the worksheet for local

tax on page A-5 of the instructions you will see that (at

least for California) it calculates the ratio of the local

tax rate to the state tax rate. Then it applies that ratio

to THE SALES TAX FROM THE TABLE, not to an amount of income.

That's also what the calculator does. There is no getting

away from using the table.

Furthermore, you cannot escape the fact that the table does

not rely on the exact amount of income. It works in large

steps. For example, experiment with the calculator using the

following inputs.

Tax year 2023

Single, no dependents, no large purchases

AGI - see below, no nontaxable income

ZIP code 93501, Tehachapi

With those parameters, for any AGI from $50,000 to $59,999

the sales tax will be $1,018.92, so the calculator is

obviously not applying a tax rate to any specific fraction

of income. For AGI of $60,000 the sales tax will be

$1,087.36. That's $68.44 sales tax on an additional $1 of

income. That's not just rounding to whole dollars.

It seems to me that finding a formula is not your real goal.

Your real goal is to make your spreadsheet calculate the

sales tax deduction. Couldn't you incorporate the table for

California into your spreadsheet, and have the spreadsheet

look up the sales tax deduction in the table (with

appropriate adjustment for local tax)?

I also can't help wondering why the sales tax deduction is

of any significance to you in notoriously high-tax

California. I'm sure that for most people in California,

their state income tax is much more than the sales tax, so

they never deduct sales tax. Is your situation such that

your state income tax is very low?

Bob Sandler

Feb 21, 2024, 12:31:10 PMFeb 21

to

On Tue, 20 Feb 2024 22:28:45 EST, someone wrote:

> The calculator does not apply the sales tax rate to any

> specific fraction of income. It just doesn't work that way.

Sorry, but you're just wrong, possibly aside from the
> The calculator does not apply the sales tax rate to any

> specific fraction of income. It just doesn't work that way.

word "specific".

The calculator at irs.gov/SalesTax said my sales tax

was X. A tax of X corresponds to X/0.080034 in

purchases, based on the blended rate 8.0034% shown by

the calculator. My income as entered in the calculator

was quite different from that figure. Therefore the

calculator must not apply the tax rate to the total

income entered. In other words, whoever programmed the

calculator did so on the basis that not all the income

was spent on taxable items.

The question is how the calculator decides what portion

of income it will count as spent on taxable items.

I have already explained why the sales tax tables are

not relevant here, and have already pointed out that

the calculator gives an answer that is not in whole

dollars and therefore does not appear in the sales tax

table.

Feb 21, 2024, 11:39:14 PMFeb 21

to

Bob Sandler <bob_u...@yahoo.com> wrote in

news:5oqatihlf13auir0q...@4ax.com:

>>> Qualified Charitable Distributions are nontaxable IRA distributions.

>>> Should I include them as income for the calculator or the tables?

>

> That's an interesting question. I haven't responded to that

> because I don't know the answer. I was hoping someone else

> would respond who knows the answer.

Here's what the IRS says:

"Like other IRA distributions, QCDs are reported on Line 4 of Form 1040

or Form 1040-SR. If part or all of an IRA distribution is a QCD, enter

the total amount of the IRA distribution on Line 4a. This is the amount

shown in Box 1 on Form 1099-R.

"Then, if the full amount of the distribution is a QCD, enter 0 on Line

4b. If only part of it is a QCD, the remaining taxable portion is

normally entered on Line 4b.

"Either way, be sure to enter "QCD" next to Line 4b. Further details will

be in the instructions to the 2023 Form 1040."

https://www.irs.gov/newsroom/qualified-charitable-distributions-allow-

eligible-ira-owners-up-to-100000-in-tax-free-gifts-to-charity#:

~:text=Like%20other%20IRA%20distributions%2C%20QCDs,enter%200%20on%

20Line%204b.

--

Stu

http://DownToEarthLawyer.com

news:5oqatihlf13auir0q...@4ax.com:

>>> Qualified Charitable Distributions are nontaxable IRA distributions.

>>> Should I include them as income for the calculator or the tables?

>

> That's an interesting question. I haven't responded to that

> because I don't know the answer. I was hoping someone else

> would respond who knows the answer.

"Like other IRA distributions, QCDs are reported on Line 4 of Form 1040

or Form 1040-SR. If part or all of an IRA distribution is a QCD, enter

the total amount of the IRA distribution on Line 4a. This is the amount

shown in Box 1 on Form 1099-R.

"Then, if the full amount of the distribution is a QCD, enter 0 on Line

4b. If only part of it is a QCD, the remaining taxable portion is

normally entered on Line 4b.

"Either way, be sure to enter "QCD" next to Line 4b. Further details will

be in the instructions to the 2023 Form 1040."

https://www.irs.gov/newsroom/qualified-charitable-distributions-allow-

eligible-ira-owners-up-to-100000-in-tax-free-gifts-to-charity#:

~:text=Like%20other%20IRA%20distributions%2C%20QCDs,enter%200%20on%

20Line%204b.

--

Stu

http://DownToEarthLawyer.com

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