VAT tax / Spain trip

[Lynn EA USTCP in Louisiana]

1040 Client itemizes. Goes to Spain for a vacation. For schedule A keeps track of actual sales tax remitted. Is the VAT paid while in Spain included in the actual sales tax paid? Or is it added to foreign tax paid? Or is it ignored?

Thank you,

Lynn Jacobs, EA, NP

Kenner, LA

[TAXBILLY]

I believe the sales tax deduction specifically says state and local sales tax.

I believe the personal property tax deduction specifically says state and local tax.

The foreign tax that could be deducted on Schedule A is the foreign income tax.

taxbilly

[tilt]

I tried Googling in general and also searched the IRS site and couldn't find anything allowing this deduction. (I sure was curious though.)

[Lynn EA USTCP in Louisiana]

I tried Googling in general and also searched the IRS site and couldn't find anything allowing this deduction. (I sure was curious though.)

Well, if I had just sat back and pondered this a bit, I'd have realized the answer - it's all in recognizing the forest from the trees.

VAT tax = a foreign tax paid.

Sales taxes = state and local taxes paid

Ergo, the VAT tax may be deducted either on Schedule A, as foreign taxes paid, or taken as a foreign tax credit via form 1116 (a bear to complete in some instances).

Thanks, though for considering this.

Lynn Jacobs, EA, NP

Kenner, LA

[TAXBILLY]

Well, if I had just sat back and pondered this a bit, I'd have realized the answer - it's all in recognizing the forest from the trees.

VAT tax = a foreign tax paid.

Sales taxes = state and local taxes paid

Ergo, the VAT tax may be deducted either on Schedule A, as foreign taxes paid, or taken as a foreign tax credit via form 1116 (a bear to complete in some instances).

Thanks, though for considering this.

Lynn Jacobs, EA, NP

Kenner, LA

Disagree. The foreign tax deduction on Schedule A and the foreign tax credit on Form 1116 are specifically for income tax.

taxbilly

[tilt]

I think I have to agree with taxbilly on this one.