State and Local Income Tax
You can deduct state and local income taxes you paid. However, you must claim the deduction in the year you paid the taxes.
You’ll increase your deduction for the current year if both of these are true:
- You make estimated state tax payments.
- You make the last payment in December instead of January.
If you didn’t do this last year, deduct it in the current year — the year you paid it. If you owed money to a state or locality last year, you probably paid the bill in the current year. If you did, include the amount in this year’s deduction.
Your state and local sales taxes
You can deduct your state and local sales taxes instead of state and local income taxes. This could benefit you if your sales taxes are more than your income taxes.
Most people who live in a state with a state income tax probably paid more income tax than sales tax. However, you might live on federal or state pensions and Social Security income. If you do, you might benefit from this deduction since those aren’t usually taxable as state income.
Did you sell property over the past tax year? Find out from the experts at H&R Block how to calculate cost basis for your real estate.
Learn more about receiving a short-term mutual funds loss, from the tax experts at H&R Block.
There are two different types of IRAs - traditional and ROTH. Use this IRA calculator from Betterment and H&R Block to determine which one is best for you.