When you make a purchase in Idaho, the store will normally take the applicable sales tax from you at that moment. In that situation, there is nothing else you need to do. However, you might need to pay the tax directly to the Idaho State Tax Commission if you buy something from an out-of-state merchant who does not charge Idaho sales tax. To accomplish this, submit a use tax return and pay the required tax. The use tax is charged at the same 6% rate as the standard sales tax.
If you live in Oregon but work in Idaho, you might be allowed to deduct the cost of your health insurance premiums on your Idaho state income tax return. Idaho permits self-employed people, who may include Oregonians who work there, to deduct the cost of their health insurance premiums. However, there are some restrictions and limitations on the deduction, so you should speak with a tax expert to find out if you qualify.
State and local income taxes or state and local sales taxes, but not both, may be claimed as deductions on your federal income tax return if you itemize deductions. To calculate how much you may write off if you decide to deduct sales taxes, utilize the IRS’s sales tax deduction calculator. Your income, your state of residency, and the total amount of sales tax you paid over the course of the year will all affect the amount.
Your specific situation will determine whether it’s better to deduct income tax or sales tax. In general, it may be more advantageous to deduct your income taxes if you reside in a state with high income taxes and low sales taxes. It might be more advantageous to deduct your sales taxes if you reside in a state with high sales taxes but low income taxes. However, you should base your choice on your unique circumstances, such as your income level, where you live, and how much tax you paid last year. A tax expert should always be consulted to identify the best course of action for your unique situation.
In conclusion, Idaho’s sales tax, but not its income tax, is frequently applied to purchases made in Idaho by Oregonians. You may be forced to pay the sales tax directly to the Idaho State Tax Commission if you make a purchase from an out-of-state merchant who does not collect Idaho sales tax. You might be eligible to claim your premiums as a tax deduction on your Idaho state income tax return if you work in Idaho and pay for your own health insurance. Your unique situation will determine whether it makes more sense to deduct income tax or sales tax, so it’s always a good idea to speak with a tax expert to figure out the best course of action.