Are you itemizing your deductions in your individual income tax return? Consider deducting taxes you paid during the year. There are four types of deductible non-business taxes: State, local, and foreign income taxes, State and local general sales taxes, State, local and foreign real estate taxes, and State and local personal property taxes. You can elect to deduct state and local general sales taxes instead of state and local income taxes. But remember you cannot deduct only one. If you elect to deduct state and local income taxes, you must check box “a” on line 5 of Form 1040, Schedule A. If you elect to deduct state and local general sales taxes, you must check box “b” on line 5 of Form 1040, Schedule A. Remember, State and local income taxes withheld from your wages during the year appear on your Form W-2. If you elect to deduct state and local general sales taxes, you can deduct expense actually, but in that case, you must keep your actual receipts showing general sales taxes paid. Instead you can use the Optional State Sales Tax Table and the Optional Local Sales Tax Tables in Instructions of Schedule A, Form 1040. Consider also, checking Sales Tax Deduction Calculator on the IRS website. In line 6 of your Form 1040, Schedule A, Real estate taxes are allowed as deduction. Real estate taxes are any state, local, or foreign taxes levied on real property for the general public welfare. Remember, the charge must be uniform against all real property in the jurisdiction at a like rate. Consider checking your real estate bill to figure out the total deduction. If your taxing authority (or lender) doesn't furnish you a copy of your real estate tax bill, ask for it. In line 7 of your Form 1040, Schedule A, Personal property taxes are allowed as deduction. They are based only on the value of personal property such as a boat or car. For example, you paid a yearly fee for the registration of your car. Part of the fee was based on the car's value and part was based on its weight. You can deduct only the part of the fee that was based on the car's value. If you had any deductible tax not listed on line 5, 6, or 7, list the type and amount of tax on line 8. Be cautious to enter only one total on line 8. Consider Including on this line income tax you paid to a foreign country or U.S. possession. But be cautious, you can also take a credit for the foreign tax instead of a deduction.
