Tax season may be over for some, but you might have some lingering questions. One of the main things to consider when facing your next filing season is whether you should itemize or take the standard deduction. Knowing what you can deduct is essential to ensuring you are taking full advantage of all the deductions available to you. Taxes paid may be deducted as an itemized deduction on your federal income tax return.
State and local taxes, including income, property, general sales taxes or foreign taxes paid are generally deductible in the year they were paid. However, non-deductible taxes include Federal taxes on estate gifts or inheritances, state taxes related to cigarettes or alcoholic beverages, among others. Also keep in mind that any State and Local Sales Tax paid on business property is not deductible, but should be added to the basis of the acquired property.
It is important to note that if you choose to itemize your deductions, you cannot also claim the standard deduction. It would be beneficial for taxpayers to review whether they can benefit from taking an itemized deduction for taxes paid over claiming a standard deduction. If you are unsure if you should itemize or take the standard deduction, it is highly recommended to consult a qualified tax professional.
Taxes can be complicated, and an experienced tax professional can ensure that all eligible deductions are taken for maximum benefit. Whether you decide to itemize your deductions or use the standard deduction, taxes paid may be deducted on your federal income tax return.
You can also find more information about deductions from the IRS publication 17, part III.
