Previous Year Taxes - Deductible

[Eafsh]

Hello,

When I filed my 2020 taxes, I had to pay more taxes to both federal and California state. So when I completed the 2020 tax return, I saw a message that I can deduct these payments from my 2021 taxes. However, I couldn’t find a place to enter them into my 2021 taxes. Does entering this amount will affect the amount that I need to pay for my 2021 tax return if I got the standard deduction?

Thanks!

[DoninGA]

Federal taxes owed and paid for a prior tax year are not entered on a federal tax return.

State taxes owed and paid for a prior tax year are deductible on a federal tax return.

To enter state income taxes paid -

• Click on Federal Taxes (Personal using Home and Business)
• Click on Deductions and Credits
• Click on I'll choose what I work on (if shown)
• Scroll down to Estimates and Other Taxes Paid
• On Other Income Taxes, click on the start or update button

On the next screen scroll down to Other Income Taxes Paid in 2021

Or enter state taxes paid in the Search box located in the upper right of the program screen. Click on Jump to state taxes paid

[VolvoGirl · Accepted solution]

You can only deduct state taxes paid in 2021 on a federal return.  That includes a prior state tax due, state withholding and any state estimated payments.  But only if you itemize deductions and don't take the Standard Deduction.  So if you took the Standard Deduction it won't affect your return.

Since the Standard Deduction has increased so many people will be switching to the Standard Deduction.  And there is a max 10,000 limit (5,000 MFS) of property tax and state taxes "SALT".  SALT is State And Local Tax.  Which includes property tax, any state tax paid like for last year’s return and includes any state withholding from your W2s and any 1099s you have. And any taxes in W2 box 14 and 19 like SDI or VDI. You can only deduct up to 10,000 (5,000 MFS) for SALT State and Local Taxes.

For 2021 the standard deduction amounts are:

Single 12,550 + 1,700 for 65 and over or blind (14,250)

HOH 18,800 + 1,700 for 65 and over or blind

Joint 25,100 + 1,350 for each 65 and over or blind

Married filing Separate 12,550 + 1,350 for 65 and over or blind