topic Deductions and Credits in Deductions & credits

Deductions and Credits

RIMONT — Thu, 26 Mar 2020 00:16:45 GMT

Can I take a deduction or credit for tax, interest and penalty paid in 2019 for an underpayment in 2017?

Re: Deductions and Credits

MinhT1 — Thu, 26 Mar 2020 00:38:21 GMT

No, interest and penalty for an underpayment of tax are not tax deductible or eligible for a tax credit.

Re: Deductions and Credits

ee-ea — Thu, 26 Mar 2020 00:43:29 GMT

If the taxes paid were state income taxes, they are deductible.

Re: Deductions and Credits

xmasbaby0 — Thu, 26 Mar 2020 03:06:07 GMT

I HAD TO PAY BACK TAX OWED

The money you paid to the IRS for a previous year’s federal tax return is not deductible, so you do not enter it anywhere on your 2019 return. If you paid taxes due in 2019 to your state or local government, you can enter that by going to Federal> Deductions and Credits> Estimates and Other Taxes Paid> Other Income Taxes. You can enter the taxes you paid, but do not include any penalties or interest.

There are six states that allow you to enter the federal tax you paid on your state return--Alabama, Iowa. Louisiana, Missouri, Montana, and Oregon. If you are filing in one of these states watch for the deduction when you prepare your state return.