Page 4

sales taxes paid on items used in your trade or business. You must keep your actual re- ceipts showing general sales taxes paid to use this method. Refund of general sales taxes. If you received a refund of state or local gener- al sales taxes in 2016 for amounts paid in 2016, reduce your actual 2016 state and local general sales taxes by this amount. If you received a refund of state or local general sales taxes in 2016 for prior year purchases, don't reduce your 2016 state and local general sales taxes by this amount. But if you deducted your actual state and local general sales taxes in the earlier year and the deduc- tion reduced your tax, you may have to include the refund in income on Form 1040, line 21. See Recoveries in Pub. 525 for details. Optional Sales Tax Tables Instead of using your actual expenses, you can use the 2016 Optional State Sales Tax Table and the 2016 Optional Local Sales Tax Tables at the end of these instructions to figure your state and local general sales tax deduction. You may also be able to add the state and local general sales taxes paid on cer- tain specified items. To figure your state and local general sales tax deduction using the tables, complete the State and Local General Sales Tax Deduction Worksheet or use the Sales Tax Deduction Calculator at IRS.gov/salestax. If your filing status is married filing separately, both you and your spouse elect to deduct sales taxes, and your spouse elects to use the optional sales tax tables, you al- so must use the tables to figure your state and local general sales tax deduc- tion. Instructions for the State and Local General Sales Tax Deduction Worksheet Line 1. If you lived in the same state for all of 2016, enter the applicable amount, based on your 2016 income and exemptions, from the 2016 Optional State Sales Tax Table for your state. Read down the “At least–But less than” columns for your state and find the line that includes your 2016 income. If mar- CAUTION ! CAUTION ! ried filing separately, don't include your spouse's income. Your 2016 income is the amount shown on your Form 1040, line 38, plus any nontaxable items, such as the following. Tax-exempt interest. Veterans' benefits. Nontaxable combat pay. Workers' compensation. Nontaxable part of social security and railroad retirement benefits. Nontaxable part of IRA, pension, or annuity distributions. Don't include rollovers. Public assistance payments. The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. What if you lived in more than one state? If you lived in more than one state during 2016, look up the table amount for each state using the rules sta- ted earlier. If there is no table for your state, the table amount is considered to be zero. Multiply the table amount for each state you lived in by a fraction. The numerator of the fraction is the number of days you lived in the state during 2016 and the denominator is the total number of days in the year (366). Enter the total of the prorated table amounts for each state on line 1. However, if you also lived in a locality during 2016 that imposed a local general sales tax, don't enter the total on line 1. Instead, com- plete a separate worksheet for each state you lived in and enter the prorated amount for that state on line 1. Example. You lived in State A from January 1 through August 31, 2016 (244 days), and in State B from September 1 through December 31, 2016 (122 days). The table amount for State A is $500. The table amount for State B is $400. You would figure your state general sales tax as follows. State A: $500 x 244/366 = $333 State B: $400 x 122/366 = 133 Total = $466 If none of the localities in which you lived during 2016 imposed a local gen- eral sales tax, enter $466 on line 1 of your worksheet. Otherwise, complete a separate worksheet for State A and State B. Enter $333 on line 1 of the State A worksheet and $133 on line 1 of the State B worksheet. Line 2. If you checked the “No” box, enter -0- on line 2, and go to line 3. If you checked the “Yes” box and lived in the same locality for all of 2016, enter the applicable amount, based on your 2016 income and exemptions, from the 2016 Optional Local Sales Tax Tables for your locality. Read down the “At least–But less than” columns for your locality and find the line that includes your 2016 income. See the instructions for line 1 of the worksheet to figure your 2016 income. The exemptions column refers to the number of exemptions claimed on Form 1040, line 6d. What if you lived in more than one locality? If you lived in more than one locality during 2016, look up the table amount for each locality using the rules stated earlier. If there is no table for your locality, the table amount is consid- ered to be zero. Multiply the table amount for each locality you lived in by a fraction. The numerator of the fraction is the number of days you lived in the locality during 2016 and the denomina- tor is the total number of days in the year (366). If you lived in more than one locality in the same state and the local general sales tax rate was the same for each locality, enter the total of the prora- ted table amounts for each locality in that state on line 2. Otherwise, complete a separate worksheet for lines 2 through 6 for each locality and enter each prora- ted table amount on line 2 of the appli- cable worksheet. Example. You lived in Locality 1 from January 1 through August 31, 2016 (244 days), and in Locality 2 from Sep- tember 1 through December 31, 2016 (122 days). The table amount for Locali- ty 1 is $100. The table amount for Lo- cality 2 is $150. You would figure the amount to enter on line 2 as follows. Note that this amount may not equal your local sales tax deduction, which is figured on line 6 of the worksheet. Locality 1: $100 x 244/366 = $ 67 Locality 2: $150 x 122/366 = 50 Total = $117 Line 3. If you lived in California, check the “No” box if your combined state and local general sales tax rate is 7.5000%. Otherwise, check the “Yes” box and in- clude on line 3 only the part of the com- bined rate that is more than 7.5000%. A-4