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How to Deduct State Income Tax

Contributor
By Mark P. Cussen
eHow Contributing Writer
Taxes
Taxes

State income taxes can be deductible for taxpayers under certain circumstances. This article shows you what you need to do to take this deduction.

Difficulty: Easy
Instructions

Things You'll Need:

  • Tax return
  • Form Schedule A and its instructions
  1. Step 1

    First, you must determine whether or not you are able to itemize your deductions. If you are doing your taxes by hand, print out Schedule A and enter all pertinent deductions on the form. If you are doing your return by computer, complete this section of the program.

  2. Step 2

    Enter all deductions listed on Schedule A, including unreimbursed medical expenses, home mortgage interest and points paid, real estate and personal property taxes, unreimbursed work expenses, miscellaneous deductions, casualty and theft losses and charitable contributions of both cash and property.

  3. Step 3

    Look at your state tax return from the previous year and find the number that denotes the amount you actually paid. Don't confuse this number with how much you had withheld or the amount of your refund or balance due. You need the amount that you actually owed and paid the state in taxes.

  4. Step 4

    Transfer this number over to the Schedule A of your current tax return. This amount is added into the rest of your itemized deductions. Once you have totaled your itemized deductions, see if the total is greater than the amount of your standard deduction for 2008.

  5. Step 5

    If your itemized deductions are less than your standard deduction, then you cannot use them and no state tax deduction can be taken. If they are greater than your standard deduction, then enter the total allowable amount on your 1040.

Tips & Warnings
  • This article is intended to be purely educational in nature and should not be construed as tax advice. For more information, visit the IRS website or consult your tax or financial adviser.
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