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CA_Tax_Payer
Level 2

Can I Deduct Income Tax paid to a Nonresident State?

Hi, I am a resident of California but I have Farm Rental income from a property our LLC owns in Indiana.  (The LLC is a single entity LLC owned only by my wife and me.) There is no other reason for me to pay an income tax to Indiana.  Would I be able to claim the Indiana income tax I paid last year as a farm expense this year on my federal return? (I am already deducting the Property Tax on that farm.)  Thanks!

1 Best answer

Accepted Solutions
ToddL99
Expert Alumni

Can I Deduct Income Tax paid to a Nonresident State?

Yes, you can deduct the IN income tax paid on your farm rental income as a "farm expense" on your federal return.

 

This would come under the same category as business mortgage interest and business property taxes; you don't have to itemize deductions in order to deduct them from your business ("farm rental") income.

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2 Replies
ToddL99
Expert Alumni

Can I Deduct Income Tax paid to a Nonresident State?

Yes, you can deduct the IN income tax paid on your farm rental income as a "farm expense" on your federal return.

 

This would come under the same category as business mortgage interest and business property taxes; you don't have to itemize deductions in order to deduct them from your business ("farm rental") income.

View solution in original post

CA_Tax_Payer
Level 2

Can I Deduct Income Tax paid to a Nonresident State?

This is very helpful.  Thank you!

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