Tax Resources
 

What are deductible taxes?

Do not confuse yourself with tax deductible items and deductible taxes. Deductible taxes are taxes you paid that you can deduct, whereas tax deductible items can be any expenses you paid that are exempt from taxation. Tax deductible items are not necessarily taxes paid. Not all items are tax deductible but the more tax deductible items you have on your tax return, the less tax you owe the IRS.

For discussion of what are tax deductible vs what are not tax deductible, see www.IRS-deductions.org. Below are information on deductible taxes and nondeductible taxes.

Taxes you paid

In order for a tax to be deductible by you, the tax must be:

  • imposed on you and must be
  • paid by you during the tax year.

You report deductible taxes online 5 through 9 of schedule A.

What are deductible taxes?

Deductible taxes include:

  • State and local income taxes including
    • taxes withhold from your salary,
    • estimated payments,
    • tax paid for earlier year

Your local tax withheld is reported in box 19 of the tax form W-2. Box 17 of tax form W-2 states the amount of stat tax withheld. Also deductible are mandatory contributions you made to:

  • the CA, NJ, NY Non occupational Disability Benefit Fund,
  • RI Temporary Disability Benefit Fund,
  • Washington State supplemental Workmen's Conservation Fund or
  • West Virginia Unemployment Compensation fund
  • General sales taxes

You can elect to deduct state and local general sales taxes instead of state and local income taxes. You cannot deduct both state and local general sales taxes and income taxes.

  • Real estate taxes
  • Personal property taxes
  • Other taxes e. g. if you have a mutual fund that invest overseas, foreign taxes may be paid on your dividends.
  • Foreign income taxes
Nondeductible taxes and fees

Taxes and fees that are generally  not deductible include:

  • federal taxes such as income tax, social security FICA and Medicare
  • driver's, marriage, hunting  or pet licenses
  • water and sewer taxes
  • taxes on alcoholic beverages, cigarettes and tobacco
  • taxes on gasoline, diesel, and other motor fuels used in a non business vehicle
  • utility taxes - telephone, gas , electricity, etc
  • fines and penalties

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