What Taxes Are Deductible?

Which Taxes Can You Deduct?

               
   

You Can Deduct

 

You Cannot Deduct

           

Income Taxes

 

State and local income taxes.

 

Federal income taxes.

   

Foreign income taxes.

 

Employee contributions to private or voluntary disability plans.

   

Employee contributions to state funds listed under Contributions to state benefit funds.

 

 

    One-half of self-employment tax paid.    
           

Real Estate

 

State and local real estate taxes.

 

Taxes for local benefits (with exceptions).

Taxes  

Foreign real estate taxes.

 

Trash and garbage pickup fees (with exceptions).

   

Tenantís share of real estate taxes paid by cooperative housing corporation

 

Rent increase due to higher real estate taxes.

   

.

 

Homeowners association charges.

           

Personal Property Taxes

 

State and local personal property taxes.

  Import duties.
           

Other Taxes

 

Taxes that are expenses of your trade or business or of producing income.

 

State and local sales and use taxes.

   

Taxes on property producing rent or royalty income.

 

Federal excise taxes, such as telephone taxes (see Taxes and Fees You Cannot Deduct).

   

Occupational taxes.

   
           

Fees and Charges

 

Fees and charges that are expenses of your trade or business or of producing income.

 

Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driverís licenses car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot
Deduct).

         

Fines and penalties.

Taxes and Fees You Cannot Deduct

Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them.

Taxes and fees that are generally not deductible include the following items.

  • Estate, inheritance, legacy, or succession taxes. These taxes are generally not deductible. However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit.
  • Federal income taxes. This includes taxes withheld from your pay.
  • Fines. You cannot deduct penalties for violation of any law, including forfeiture of related collateral deposits.
  • Gift taxes.
  • License fees. You cannot deduct license fees for personal purposes (such as marriage, driver’s, and dog license fees).
  • Social security. This includes social security, Medicare, or railroad retirement taxes withheld from your pay.
  • Social security and other employment taxes for household workers. You generally cannot deduct the social security or other employment taxes you pay on the wages of a household worker. However, you may be able to include them in medical or child care expenses.

Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity.



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