Every income tax return is meant to be a reasonable settlement. It is not perfect or completely accurate in every respect for most returns.
The income tax tables (for taxable incomes up to $100,000) are built in $50 increments. The income tax on $40,001 is the same as on $40,049. If the form 1040 has itemized deductions, the deduction for sales tax is based on a table that uses the income (including non-taxed income like part of the Social Security benefits) and the number of people in the household (as shown on the return).
Of course, you can keep every receipt for the year and do a total of all the sales tax you paid. A couple of folks have tried to do that and the table came out with a total that was very close to their actual detailed amount. But keeping track of every purchase is time-consuming. My point is the sales-tax deduction is a reasonable estimate.
When you purchase something that is not bought every year (a car, furniture, etc.), the sales tax on that should be added to the sales tax computed by the table. Sometimes the return is finished and filed, and then you remember that small charitable contribution you forgot to list, or you have some other small item that was not listed, but you have proof of it. It might be a good idea to still make notes of those items not claimed in that year’s tax file with a note “Raise if Audited.”
It probably is not worth your time and effort to file an amended return, form 1040X. However, in case you were selected for an audit, you would have the information to tell the auditor, “Thanks for asking — I have some more deductions to be claimed. Here is the documentation. Please prepare the refund for me (at your time and expense).”
If the rest of your return is okay, the IRS auditor probably will reduce the time spent on your return and might issue a “No Change” report for you to accept. If the amounts involved are small, it may be best to just accept that report and get on with life.
Some time ago, a client came in after the return was filed saying, “Look, here is $12 more interest income that did not get on the return.” However, the increase in income resulted in the same tax (it fell in the $50 bracket of the tax table). We just made a note of the item instead of filing an amended return.
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.