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.
How should you and your spouse report a joint cash gift on your taxes? Learn more from the tax experts at H&R Block.
The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.
Uber and Lyft drivers must file self-employment income taxes. Learn more with the tax experts at H&R Block.
What is a closing disclosure? When you buy a house, you will receive a closing disclosure that can benefit you at tax time. Learn more at H&R Block.