Are Pennsylvania state taxes paid on the proceeds of a wrongful death lawsuit deductible on federal taxes?

[AnnetteB · Accepted solution]

Yes, state taxes paid in the current tax year is deductible as part of your itemized deductions included on Federal Schedule A. 

To enter this information into your Federal return, use these steps:

• 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 taxes 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 taxes paid”

• Click on the blue “Jump to state taxes paid” link

• Choose the appropriate category for how your taxes were paid (withheld, paid with your return, etc.) and enter your information