How to Claim Deductions for State & Local Taxes

Video Transcript

"We pay taxes all over the place. State, city and federal taxes. I'm Kristen Brand and I'm going to show you how to claim a deduction for state and local taxes. There are a couple of different taxes that you'll pay in the place where you live. The first and most obvious one is if you're a homeowner and that is the real estate tax that you pay on your home. The easiest place to find this is on your year end statement from your bank or mortgage company. So don't throw those away when they come in the mail. And if you're not ready to look at them, keep them all together in a special place. You'll want to look for this form called a 1098. It outlines both the interest that you pay on your mortgage and then somewhere near the bottom it will typically give you the real estate taxes that you've paid if they were escrowed in your account. If that doesn't work, you can look on the Internet and go to your local county website, usually its the property appraiser's website, so if you need to use a search engine, you can search for property appraiser and you can look up your address and it will tell you the property taxes that you paid. And that number can be used on your tax return. The other area that is typically used is if you paid state income taxes which can be found on your W2 form from your employer or the sales taxes that you've paid if you live in a state where you don't pay state income tax. There are a couple of different ways where you can claim a sales tax deduction. You can either keep large piles of receipts, accumulate them and add them together, or there's actually an IRS table where you can figure out a number based on your earnings and then add any big purchases on top. So if you're looking to buy a car towards the end of the year and you may want to deduct that sales tax, that's one more reason to get it in December instead of waiting until January. I'm Kristen Brand and those are some tips on how to take a state and local tax deduction."