How to deduct previous years' expense paid now. HELP!!

Forum|Forum|6 years ago
October 18, 2019
2 replies
38 views

I have a bit of a odd situation and as far as I can tell after spending an hour trying to get some direction from the IRS they are not going to provide it.

I owned some rental real estate that for a few years a rented out as vacation rentals. Years ago I sold it and retired due to disability and filed my final schedule E.

After I closed and sold this venture the local city came after me and many other people for TOT tax they said we had to collect and were now forced by them to put it out of our pockets. In my case it was quite a lot of money.

So I had to fork out the actual cash this year, but it is a legitimate expense incurred in the process of making PREVIOUS years income (2011-2015) for which a already paid the income tax.

So how do I deduct it form the income I made as a result of that expense (and already paid tax on)?

I no longer have the property to file the schedule E for.
In fact, I don't have much income in general to take that the get deduction against.

IRS rules say I can only amend or return back up to three years.

TurboTax Home & Biz Windows

Anonymous

you can only deduct the expenses in the year paid, so amending prior years is not an option. deduct on schedule e

Carl

Level 11

If you sold or otherwise disposed of the rental property in 2017 and reported same to the IRS on your 2017 tax return, that means you will not be filing SCH E with your 2018 return. Since taxes paid are deducted in the year they are paid regardless of what year the tax is *for*, you'll claim those taxes actually paid in 2018 under the Deductions and credits tab in the Estimates & Other Taxes Paid section.

Do note that your SALT (State and Local Taxes) deduction on the federal return are limited to a maximum of $10,000. So if the total exceeds $10K, the additional amount will not make any difference to your overall federal tax liability.

Also, amending the prior year's return is not an option, because taxes and other expenses are claimed in the tax year they are actually paid, and it just does not matter what year is paid "for".