After an audit of my 2014 taxes, I needed to repay part of my refund back to STATE. The error did not affect the IRS taxes. However, since the IRS taxes state refunds, can I claim the additional state taxes on this year's (2018) taxes or do I need to file an amended IRS for 2015?
If I can claim on my 2018 taxes, where in Turbo Tax will I submit the updated numbers?
You can claim a state balance due (for any tax year) that was paid during the year as a deduction on your tax return for the year that the balance due was paid.
For example, if you paid a $100 balance due for your 2014 state taxes in 2017, then you would be able to deduct it on your 2017 tax return.
Use the following steps to go to the section of your return to enter the amount that was paid:
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “state balance due paid” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to state balance due paid”
- Click on the blue “Jump to state balance due paid” link
- Scroll to the bottom of the screen until you see Other Income Taxes Paid in 2017
- Click Start or Update beside Payments for 2015 or a prior year state or local income taxes paid in 2017
In the aforementioned scenario, There are 3 elements to my payment after a state tax audit of prior years.
1) Corrected Tax amount due
2) Penalty $ due &
Which components can be deducted on my federal return?
Plus Interest or not?
Plus the Penalty $ or not?
Thanks in advance.
Penalties and interest are not deductible. Only the additional state or local tax paid would be allowed as a deduction on your Federal return.
State income taxes paid are not deductible at the state level. The penalties and interest paid are also not deductible on your state return.
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