Ask the taxgirl: State and Local Taxes Paid in Other Years

Taxpayer asks:


Can I deduct state sales tax for 2008 and deduct state income tax paid for another year (2007)??

Taxgirl says:

Absolutely! There is no rule that the taxes must have been assessed in 2008 in order to take them as a deduction. Assuming that you itemize your deductions, you can deduct state and local taxes actually paid in 2008, regardless of when assessed. You cannot, however, include penalties or interest associated with prior tax years.

You cannot deduct certain state and local taxes, such as the gas tax, car inspection fees, assessments for sidewalks or improvements to your property, tax you paid for someone else, and fees for marriage licenses, driver’s licenses, dog licenses and the like.

And remember, for the 2008 tax year, you have the choice to elect to deduct state and local general sales taxes paid in 2008 or state and local income taxes paid in 2008. You cannot, however, deduct both.

Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.

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Tagged as: local tax burden, sales-tax, state income tax, state tax