Claim Deductions for State and Local Taxes
Deduct state and local taxes when you itemize deductions for federal income taxes. These deductions will lower your taxable income and reduce your taxes.
Instructions
1. Determine if you will be itemizing deductions. Only itemize if the deductions are greater than your standard deduction for your filing status.
2. Calculate any state income taxes you paid in the tax year. Include W-2 withholding, estimated payments, and any balance due from a previous year. Write the total amount on line 5 of Schedule A.
3. Find out if you paid any mandatory contributions to state disability or benefit funds in the tax year. Only a few states, such as New York and California, have such funds. Write the total amount on line 5 of Schedule A.
4. Find out if you paid any local income taxes in the tax year. Most areas don't have local income taxes. Write the amount on line 5 of Schedule A.
5. Calculate any real estate taxes you paid on non-business property in the tax year. Write the amount on line 6 of Schedule A.
6. Find out if you paid any personal property taxes in the tax year. In some states, a portion of the automobile license fee is a personal property tax. Write the amount on line 7 of Schedule A.
7. Find out if you paid any tax to a foreign country or U.S. possession during the tax year. It is almost always better to take a foreign-tax credit, and you usually can do so. If you want to take a deduction instead of a credit, write the amount on line 8 of Schedule A.
8. Add up lines 5, 6, 7 and 8 of Schedule A. Write the grand total on line 9 of Schedule A.
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