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How do you add tax to things?

Can I deduct both state tax paid and tax withheld during the year?

  • I am re-filing my 2006 taxes. On my 2006 "State and Local Tax Deduction Worksheet" (which I got from my Turbotax software) it asks you to enter 3 things and then add them up to get my total federal deduction for line 5 of the "Itemized Deductions" sheet for my federal 1040: 1. State income tax withheld during 2006 2. Amount paid with 2005 state income tax return filed in 2006 3. Local tax paid for year 2005 during 2006 When I add them up, it is adding both my withholding and my actual tax paid for the previous year. This doesn't sound entirely correct to me. I am not entirely certain that the tax witholding should be added into this number but the form I am filling out clearly says to do so. Is this correct? Note: I filed my 2007 taxes with the online version of 2007 turbotax and it still added my state tax deduction this way and so I tend to trust this figure. Can anyone answer this for sure?

  • Answer:

    the deduction is the sum of: 1. state income taxes withheld from wages in 2006 [these are reported on your W-2s]. 2. checks actually written to state/local income taxing authorities in 2006 [the amount you paid with your 2005 state income tax return, NOT the total tax due on that return, PLUS estimated state/local income tax payments made in 2006], and 3. amounts paid as property taxes in 2006 [usually from your mortgage lender's statement on the subject, or from the actual checks you sent in in 2006 for this purpose]. 4. any other sate or local taxes you paid in 2006, AS LONG AS the tax is calculated as a percentage of the value of some asset. [example: if your state annually taxes automobiles based on their assessed value, the portion of the total payment that relates to the percentage tax is deductible, BUT the fixed portion or the processing fee is not deductible, nor is any portion based on the weight or number of cylinders or age of the vehicle.] does this help?

jonthorw... at Yahoo! Answers Visit the source

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As long as it was paid or withheld in 2006, it's deductible on your 2006 return.

crazydave

It's correct that it should add up all the state and local tax paid or withheld (which is the same as paid) during 2006. If you actually paid local taxes for 2006 in 2006, or had them withheld, that should be added in also.

Judy

You deduct only the amounts that were paid in 2006. This includes taxes withheld in 2006 and 2005 taxes that were paid in 2006. You do not deduct the entire amount of your 2005 taxes. More specificially, do not deduct the part of your 2005 taxes that was paid through withholding during 2005. Deduct only the part that was paid in 2006 when you filed your 2005 return. If you claim this deduction, then the refund received in 2007 for your 2006 taxes is taxable and must be reported on your 2007 return, which is due next month.

StephenWeinstein

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