In April 2012, Bertie, a calendar year cash basis taxpayer, had to pay the state of Michigan additional income tax for 2011.Even though it relates to 2011, for Federal income tax purposes the payment qualifies as a tax deduction for tax year 2012.

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The payment made by Bertie for state income tax in April 2012, even though it relates to the tax year 2011, is deductible on his Federal income tax return for tax year 2012. This is because Bertie is a cash basis taxpayer and the payment was made in the year 2012, which is when the deduction is allowed.

In April 2012, Bertie, a Calendar Year Cash Basis Taxpayer