If you paid additional state tax in 2016, even though it was for a past year, and you itemize deductions, you should include the additional state tax in the deduction for state income tax on your 2016 federal tax return. You can deduct only the actual tax, not interest and penalties. Here's how to enter the state tax that you paid in TurboTax.
- Click the Federal Taxes tab.
- Click Deductions & Credits.
- Click "I'll choose what I work on" or "Jump to a full list."
- On the screen "Your 2016 Deductions & Credits" scroll down to the section "Estimates and Other Taxes Paid."
- Click the Start, Update, or Revisit button for "Other Income Taxes."
- On the "Other income taxes" screen, scroll all the way down to the last section, "Other Income Taxes Paid in 2016." Click the Start, Update, or Revisit button for the last topic, "Payments for 2014 or a prior year state or local income taxes paid in 2016."
A few states allow a deduction on the state tax return for federal income tax that you paid. If your state allows it, you should enter the amount of additional federal tax for 2014 that you paid in 2016. Again, you can deduct only the actual tax, not interest and penalties.
You do not report the back federal tax that you paid on your federal tax return, and you do not report the back state tax that you paid on your state tax return.
