g-kitchen
New Member

Can I use the default state or local icome tax deduction if I lived outside of the US all year paid no state or local icome tax?

I am retired and all of my income comes from Social Security, pensions, and retirement accounts.

PhyllisG
New Member

State tax filing

In order to claim a deduction you must substantiate the deduction (e.g. receipts for purchases).  The Internal Revenue Service does have a uniform sales tax table for those who do not keep records.

If state taxes were deducted from your Social Security, pensions, and retirement accounts, then you may claim those taxes as a deduction.  If you did not pay sales or local taxes, then you cannot take the default deduction. It is best to claim the state income tax deduction.

However, if you paid foreign income taxes, then you may be able to take a credit for paying those taxes by utilizing the Form 1116  Foreign Tax Credit

It is advised to always take the larger of the deductions or credits (state income tax, sales tax, or foreign income credit).

If you chose to utilize the foreign tax credit, do the following while in your return:

  • Type foreign tax credit in Find
  • Click the Jump to foreign tax credit link

Begin navigating through the prompts, it will give you options on how to claim the credit.