Margo has $2,100 withheld from her wages for state income taxes during 2014. In March of 2014, she paid $400 in additional taxes for her 2013 state tax return. Her state income tax liability for 2014 is $2,600 and she pays the additional $500 when she files her 2014 state tax return in April of 2015. What amount should Margo deduct as an itemized deduction for state income taxes on her 2014 federal income tax return, assuming she elects to deduct state and local income taxes?

Question

Quizplus · Accepted Answer

Margo should deduct the total state income taxes paid during the tax year, which includes the $2,100 withheld from her wages and the $400 paid in March for her 2013 state tax return. Therefore, her total state income tax paid in 2014 is $2,500 ($2,100 + $400). Margo's payment of the additional $500 when she files her 2014 state tax return in April of 2015 is not deductible on her 2014 federal income tax return.

Margo Has $2,100 Withheld from Her Wages for State Income