Deducting Taxes on Your Income Taxes

This article is going to talk about how you can deduct the taxes you pay on your itemized deductions.

What? Deducting taxes on your taxes? How does that work? Well, there are several different kinds of taxes that are deductible. The first is state and local income taxes. The taxes that are withheld from your paycheck or retirement check for state and city taxes are deductible. Also, if you file your state return and you owe, the amount you pay is deductible. Also any payments you make toward your state income taxes throughout the year are deductible. Some states have funds that individuals are required to pay. They also can be deductible. But be aware that Federal income taxes are not deductible on your Schedule A or anywhere else on your Federal return.

Sales tax you pay is deductible. Over the years this has come and gone as a deduction. There has been talk of taking it away again but for now it is still a deduction. There are two ways to figure sales tax. One way is to take all your receipts for the year and add up the sales tax. If you have purchased several high cost items you may want to try it. An easier method is to use the sales tax chart provided by the IRS, which is included in the IRS instructions for Schedule A. It considers what state or states you have lived in and how many days you lived in each state, and how much your income is for the year. With this information, it calculates an average of what someone in your situation would pay in sales tax. Most of us don't save every receipt for every purchase throughout the year, but believe it or not, we have had a few people try it. We have found that more often than not, the sales tax table is pretty close.

An important thing to note when deducting sales tax and state and local income tax on your Schedule A is it is an either/or deduction. Meaning you either deduct state and local income tax paid or you deduct sales tax, whichever is greater.

Property taxes are another type of tax that is deductible. The most common is real estate taxes. This is the tax on real estate that you own that is not for business and is assessed according to the value of the property. It is only the amount you actually pay or that is paid for you by your mortgage company.

There are a few more types of tax that you can deduct on your taxes.

Go to http://www.avoidbeingaudited.com and check out our CD/MP3 "Itemized Deductions and Gambling Winnings." To learn more about deductible taxes as well as other deductions you can be utilizing.