You may want to pay the final installment of your current year's state estimated income
tax (or pay an additional amount of estimated tax, up to the total expected tax liability) in the current
tax year
so you can deduct the amount on your tax return this tax year.
Real estate
tax
Tax deductible real estate tax is
generally any state tax, local tax, or foreign tax on real
property. The tax must be charged uniformly against all property and must be based on
property value. The tax can be deducted on your tax
return. Many states and counties also impose
local benefit tax for improvements to property, such as assessments for streets,
sidewalks, and sewer lines. These taxes cannot be deducted
on your tax return. However, you
can increase the cost basis of your property by the amount of the assessment. See
IRS Publication 551,
Basis of
Assets, for more information. Local benefits are tax deductible
on your tax return if they
are for maintenance or repair, or interest charges related to those benefits.
If a portion of your monthly mortgage payment goes into an escrow account, and
periodically the lender pays your real estate tax out of the account to the local
government, do not deduct the amount paid into the escrow account on your tax return. Only deduct the amount
actually paid out of the escrow account during the tax year to the tax
authority on your tax return. The
amount paid in tax to the local tax authority should appear on the mortgage interest statement you receive from your lender.
Personal property
tax
Tax deductible personal property
tax are only those based on the value of personal
property such as a boat or car. To be tax deductible on your tax return
the tax must be charged to you on a yearly basis, even if
it is collected more than once a tax year or less than once a tax year.
Foreign tax
Generally, you can take either a
tax deduction or a tax credit for foreign income tax on your tax return.
For information regarding the foreign tax credit, refer to Tax
Topic
856.
State benefit funds
As an employee, you can deduct
on your tax return mandatory contributions to state benefit funds that
provide protection against loss of wages.
Generally, you can deduct on
your tax return only tax that is imposed on you. Thus, you cannot deduct
real estate tax on your tax return that you pay for a parent.