Part II – Taxes you paid:
This section generally exhibits different taxes paid. This section includes following sub sections:
State and Local taxes
Income Taxes.
General Sales Taxes.
Real Estate Taxes.
Personal Property Taxes.
Other Taxes.
Line 5a – State and Local taxes:
Taxpayers who itemize their deductions are allowed to deduct state and local taxes from their federal taxable income. This deduction is limited to either income or sales taxes, but not both. Personal property taxes, such as local taxes on housing and real estate, can also be deducted.
Eligible expenses for state income taxes deduction:
All income taxes imposed by state, local or foreign jurisdictions are eligible to be deducted for individuals itemizing their deductions on their Schedule A.
Withholding for state and local income taxes. (i.e., from Form W-2, Form 1099’s)
Estimated taxes paid by taxpayer.
State Disability Insurance (SDI) for some States. (i.e., CASDI, NYSDI on Form W-2’s box 14)
Here is a short list of documents that show how much state or local taxes were paid during the year:
· Form W-2 (Wage and Tax Statement), which shows state income tax withholding in box 17; local income tax withholding is shown in box 19; and contributions to state benefit funds may be shown in box 19 or in box 14.
· Form W-2G (Certain Gambling Winnings), which may show state income tax withholding in box 15 and local income tax withholding in box 17.
· Form 1099-G (Certain Government Payments), which may show state income tax withholding in box 11.
· Form 1099-INT (Interest Income), which may show state income tax withholding in box 13.
· Form 1099-DIV (Dividends and Distributions), which may show state income tax withholding in box 14.
· Form 1099-R (Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.), which may show state income tax withholding in box 12 and local income tax withholding in box 15.
· Form 1099-MISC (Miscellaneous Income), which may show state income tax withholding in box 16.
· The portion of the previous year's state refund that was applied toward estimated taxes.
Line 5b – General Sales Tax:
General sales tax varies from state to state. You may have to pay taxes even if taxpayer is not present in US and spouse is staying in US.
Sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.
Sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate.
If we see in the benefit of taxpayer, we have to select whichever is more in between State and local income taxes and General sales tax.
If taxpayer has stayed in more than one state of US, then he/she has to calculate sales tax for the fraction of days stayed in each state.
Ex: You lived in State A from January 1 through August 31, 2015 (243 days), and in State B from September 1 through December 31, 2015 (122 days). The table* amount for State A is $500. The table* amount for State B is $400. You would figure your state general sales tax as follows:
State A: $500 x 243/365 = $333
State B: $400 x 122/365 = $134
Total = $467 ($333+$134)
If taxpayer stayed in more than one locality, same rule applies as of staying in different states. First, we have to search in table for the particular locality. If locality is not present in that table, then we have to consider the table amount as ‘Zero’.
*Optional State Sales Tax Tables
Line 6 – Real Estate Taxes: (Form 1098)
Real estate taxes are paid on the property that taxpayer own. This tax payment should be done to local tax department every year. When purchase or sell a property happens, a HUD (Housing and Urban Development) statement will be given to taxpayer. HUD contains real estate taxes and property taxes too of both seller and buyer.
You can deduct the real estate taxes you pay on property in the year you pay them.
Example: You received a bill in January 2016, but you prepaid it in December 2015. This means you‘ll deduct the amount on your 2015 return.
Line 7 – Personal Property Taxes: (Form 1098)
Personal property tax is an annual tax imposed on movable assets – mobile homes, RVs, vehicles, boats, planes, etc.
Line 8 – Other Taxes:
This section will include those taxes which cannot be mentioned on lines 5, 6 and 7.
Also, Taxes paid (mostly Real Estate Taxes) to Foreign Country or US possession can be entered on this line.
Source Document:
For Mortgage interest, mortgage insurance premiums and real estate taxes.
If taxpayer has stayed in more than one state of US, then he/she has to calculate sales tax for the fraction of days stayed in each state.
Ex: You lived in State A from January 1 through August 31, 2015 (243 days), and in State B from September 1 through December 31, 2015 (122 days). The table* amount for State A is $500. The table* amount for State B is $400. You would figure your state general sales tax as follows:
State A: $500 x 243/365 = $333
State B: $400 x 122/365 = $134
Total = $467 ($333+$134)
If taxpayer stayed in more than one locality, same rule applies as of staying in different states. First, we have to search in table for the particular locality. If locality is not present in that table, then we have to consider the table amount as ‘Zero’.
*Optional State Sales Tax Tables
Line 6 – Real Estate Taxes: (Form 1098)
Real estate taxes are paid on the property that taxpayer own. This tax payment should be done to local tax department every year. When purchase or sell a property happens, a HUD (Housing and Urban Development) statement will be given to taxpayer. HUD contains real estate taxes and property taxes too of both seller and buyer.
You can deduct the real estate taxes you pay on property in the year you pay them.
Example: You received a bill in January 2016, but you prepaid it in December 2015. This means you‘ll deduct the amount on your 2015 return.
Line 7 – Personal Property Taxes: (Form 1098)
Personal property tax is an annual tax imposed on movable assets – mobile homes, RVs, vehicles, boats, planes, etc.
Line 8 – Other Taxes:
This section will include those taxes which cannot be mentioned on lines 5, 6 and 7.
Also, Taxes paid (mostly Real Estate Taxes) to Foreign Country or US possession can be entered on this line.
Source Document:
For Mortgage interest, mortgage insurance premiums and real estate taxes.
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