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Student Tax Return

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Student tax return 22. Student tax return   Taxes Table of Contents IntroductionIndian tribal government. Student tax return Useful Items - You may want to see: Tests To Deduct Any Tax Income TaxesState and Local Income Taxes Foreign Income Taxes General Sales TaxesMotor vehicles. Student tax return Real Estate TaxesReal estate taxes for prior years. Student tax return Examples. Student tax return Form 1099-S. Student tax return Real Estate-Related Items You Cannot Deduct Personal Property Taxes Taxes and Fees You Cannot Deduct Where To Deduct Introduction This chapter discusses which taxes you can deduct if you itemize deductions on Schedule A (Form 1040). Student tax return It also explains which taxes you can deduct on other schedules or forms and which taxes you cannot deduct. Student tax return This chapter covers the following topics. Student tax return Income taxes (federal, state, local, and foreign). Student tax return General sales taxes (state and local). Student tax return Real estate taxes (state, local, and foreign). Student tax return Personal property taxes (state and local). Student tax return Taxes and fees you cannot deduct. Student tax return Use Table 22-1 as a guide to determine which taxes you can deduct. Student tax return The end of the chapter contains a section that explains which forms you use to deduct different types of taxes. Student tax return Business taxes. Student tax return   You can deduct certain taxes only if they are ordinary and necessary expenses of your trade or business or of producing income. Student tax return For information on these taxes, see Publication 535, Business Expenses. Student tax return State or local taxes. Student tax return   These are taxes imposed by the 50 states, U. Student tax return S. Student tax return possessions, or any of their political subdivisions (such as a county or city), or by the District of Columbia. Student tax return Indian tribal government. Student tax return   An Indian tribal government recognized by the Secretary of the Treasury as performing substantial government functions will be treated as a state for purposes of claiming a deduction for taxes. Student tax return Income taxes, real estate taxes, and personal property taxes imposed by that Indian tribal government (or by any of its subdivisions that are treated as political subdivisions of a state) are deductible. Student tax return General sales taxes. Student tax return   These are taxes imposed at one rate on retail sales of a broad range of classes of items. Student tax return Foreign taxes. Student tax return   These are taxes imposed by a foreign country or any of its political subdivisions. Student tax return Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 530 Tax Information for Homeowners Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule E (Form 1040) Supplemental Income and Loss 1116 Foreign Tax Credit Tests To Deduct Any Tax The following two tests must be met for you to deduct any tax. Student tax return The tax must be imposed on you. Student tax return You must pay the tax during your tax year. Student tax return The tax must be imposed on you. Student tax return   In general, you can deduct only taxes imposed on you. Student tax return   Generally, you can deduct property taxes only if you are an owner of the property. Student tax return If your spouse owns the property and pays the real estate taxes, the taxes are deductible on your spouse's separate return or on your joint return. Student tax return You must pay the tax during your tax year. Student tax return   If you are a cash basis taxpayer, you can deduct only those taxes you actually paid during your tax year. Student tax return If you pay your taxes by check, the day you mail or deliver the check is the date of payment, provided the check is honored by the financial institution. Student tax return If you use a pay-by-phone account (such as a credit card or electronic funds withdrawal), the date reported on the statement of the financial institution showing when payment was made is the date of payment. Student tax return If you contest a tax liability and are a cash basis taxpayer, you can deduct the tax only in the year you actually pay it (or transfer money or other property to provide for satisfaction of the contested liability). Student tax return See Publication 538, Accounting Periods and Methods, for details. Student tax return    If you use an accrual method of accounting, see Publication 538 for more information. Student tax return Income Taxes This section discusses the deductibility of state and local income taxes (including employee contributions to state benefit funds) and foreign income taxes. Student tax return State and Local Income Taxes You can deduct state and local income taxes. Student tax return However, you can elect to deduct state and local general sales taxes instead of state and local income taxes. Student tax return See General Sales Taxes , later. Student tax return Exception. Student tax return    You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income. Student tax return For example, you cannot deduct the part of a state's income tax that is on a cost-of-living allowance exempt from federal income tax. Student tax return What To Deduct Your deduction may be for withheld taxes, estimated tax payments, or other tax payments as follows. Student tax return Withheld taxes. Student tax return   You can deduct state and local income taxes withheld from your salary in the year they are withheld. Student tax return Your Form(s) W-2 will show these amounts. Student tax return Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld. Student tax return Estimated tax payments. Student tax return   You can deduct estimated tax payments you made during the year to a state or local government. Student tax return However, you must have a reasonable basis for making the estimated tax payments. Student tax return Any estimated state or local tax payments that are not made in good faith at the time of payment are not deductible. Student tax return For example, you made an estimated state income tax payment. Student tax return However, the estimate of your state tax liability shows that you will get a refund of the full amount of your estimated payment. Student tax return You had no reasonable basis to believe you had any additional liability for state income taxes and you cannot deduct the estimated tax payment. Student tax return Refund applied to taxes. Student tax return   You can deduct any part of a refund of prior-year state or local income taxes that you chose to have credited to your 2013 estimated state or local income taxes. Student tax return    Do not reduce your deduction by either of the following items. Student tax return Any state or local income tax refund (or credit) you expect to receive for 2013. Student tax return Any refund of (or credit for) prior-year state and local income taxes you actually received in 2013. Student tax return   However, part or all of this refund (or credit) may be taxable. Student tax return See Refund (or credit) of state or local income taxes , later. Student tax return Separate federal returns. Student tax return   If you and your spouse file separate state, local, and federal income tax returns, you each can deduct on your federal return only the amount of your own state and local income tax that you paid during the tax year. Student tax return Joint state and local returns. Student tax return   If you and your spouse file joint state and local returns and separate federal returns, each of you can deduct on your separate federal return a part of the total state and local income taxes paid during the tax year. Student tax return You can deduct only the amount of the total taxes that is proportionate to your gross income compared to the combined gross income of you and your spouse. Student tax return However, you cannot deduct more than the amount you actually paid during the year. Student tax return You can avoid this calculation if you and your spouse are jointly and individually liable for the full amount of the state and local income taxes. Student tax return If so, you and your spouse can deduct on your separate federal returns the amount you each actually paid. Student tax return Joint federal return. Student tax return   If you file a joint federal return, you can deduct the total of the state and local income taxes both of you paid. Student tax return Contributions to state benefit funds. Student tax return    As an employee, you can deduct mandatory contributions to state benefit funds withheld from your wages that provide protection against loss of wages. Student tax return For example, certain states require employees to make contributions to state funds providing disability or unemployment insurance benefits. Student tax return Mandatory payments made to the following state benefit funds are deductible as state income taxes on Schedule A (Form 1040), line 5. Student tax return Alaska Unemployment Compensation Fund. Student tax return California Nonoccupational Disability Benefit Fund. Student tax return New Jersey Nonoccupational Disability Benefit Fund. Student tax return New Jersey Unemployment Compensation Fund. Student tax return New York Nonoccupational Disability Benefit Fund. Student tax return Pennsylvania Unemployment Compensation Fund. Student tax return Rhode Island Temporary Disability Benefit Fund. Student tax return Washington State Supplemental Workmen's Compensation Fund. Student tax return    Employee contributions to private or voluntary disability plans are not deductible. Student tax return Refund (or credit) of state or local income taxes. Student tax return   If you receive a refund of (or credit for) state or local income taxes in a year after the year in which you paid them, you may have to include the refund in income on Form 1040, line 10, in the year you receive it. Student tax return This includes refunds resulting from taxes that were overwithheld, applied from a prior year return, not figured correctly, or figured again because of an amended return. Student tax return If you did not itemize your deductions in the previous year, do not include the refund in income. Student tax return If you deducted the taxes in the previous year, include all or part of the refund on Form 1040, line 10, in the year you receive the refund. Student tax return For a discussion of how much to include, see Recoveries in chapter 12. Student tax return Foreign Income Taxes Generally, you can take either a deduction or a credit for income taxes imposed on you by a foreign country or a U. Student tax return S. Student tax return possession. Student tax return However, you cannot take a deduction or credit for foreign income taxes paid on income that is exempt from U. Student tax return S. Student tax return tax under the foreign earned income exclusion or the foreign housing exclusion. Student tax return For information on these exclusions, see Publication 54, Tax Guide for U. Student tax return S. Student tax return Citizens and Resident Aliens Abroad. Student tax return For information on the foreign tax credit, see Publication 514. Student tax return General Sales Taxes You can elect to deduct state and local general sales taxes, instead of state and local income taxes, as an itemized deduction on Schedule A (Form 1040), line 5b. Student tax return You can use either your actual expenses or the state and local sales tax tables to figure your sales tax deduction. Student tax return Actual expenses. Student tax return   Generally, you can deduct the actual state and local general sales taxes (including compensating use taxes) if the tax rate was the same as the general sales tax rate. Student tax return However, sales taxes on food, clothing, medical supplies, and motor vehicles are deductible as a general sales tax even if the tax rate was less than the general sales tax rate. Student tax return If you paid sales tax on a motor vehicle at a rate higher than the general sales tax rate, you can deduct only the amount of tax that you would have paid at the general sales tax rate on that vehicle. Student tax return If you use the actual expenses method, you must have receipts to show the general sales taxes paid. Student tax return Do not include sales taxes paid on items used in your trade or business. Student tax return Motor vehicles. Student tax return   For purposes of this section, motor vehicles include cars, motorcycles, motor homes, recreational vehicles, sport utility vehicles, trucks, vans, and off-road vehicles. Student tax return This also includes sales taxes on a leased motor vehicle, but not on vehicles used in your trade or business. Student tax return Optional sales tax tables. Student tax return   Instead of using your actual expenses, you can figure your state and local general sales tax deduction using the state and local sales tax tables in the Instructions for Schedule A (Form 1040). Student tax return You may also be able to add the state and local general sales taxes paid on certain specified items. Student tax return   Your applicable table amount is based on the state where you live, your income, and the number of exemptions claimed on your tax return. Student tax return Your income is your adjusted gross income plus any nontaxable items such as the following. Student tax return Tax-exempt interest. Student tax return Veterans' benefits. Student tax return Nontaxable combat pay. Student tax return Workers' compensation. Student tax return Nontaxable part of social security and railroad retirement benefits. Student tax return Nontaxable part of IRA, pension, or annuity distributions, excluding rollovers. Student tax return Public assistance payments. Student tax return If you lived in different states during the same tax year, you must prorate your applicable table amount for each state based on the days you lived in each state. Student tax return See the Instructions for Schedule A (Form 1040), line 5, for details. Student tax return Real Estate Taxes Deductible real estate taxes are any state, local, or foreign taxes on real property levied for the general public welfare. Student tax return You can deduct these taxes only if they are based on the assessed value of the real property and charged uniformly against all property under the jurisdiction of the taxing authority. Student tax return Deductible real estate taxes generally do not include taxes charged for local benefits and improvements that increase the value of the property. Student tax return They also do not include itemized charges for services (such as trash collection) assessed against specific property or certain people, even if the charge is paid to the taxing authority. Student tax return For more information about taxes and charges that are not deductible, see Real Estate-Related Items You Cannot Deduct , later. Student tax return Tenant-shareholders in a cooperative housing corporation. Student tax return   Generally, if you are a tenant-stockholder in a cooperative housing corporation, you can deduct the amount paid to the corporation that represents your share of the real estate taxes the corporation paid or incurred for your dwelling unit. Student tax return The corporation should provide you with a statement showing your share of the taxes. Student tax return For more information, see Special Rules for Cooperatives in Publication 530. Student tax return Division of real estate taxes between buyers and sellers. Student tax return   If you bought or sold real estate during the year, the real estate taxes must be divided between the buyer and the seller. Student tax return   The buyer and the seller must divide the real estate taxes according to the number of days in the real property tax year (the period to which the tax is imposed relates) that each owned the property. Student tax return The seller is treated as paying the taxes up to, but not including, the date of sale. Student tax return The buyer is treated as paying the taxes beginning with the date of sale. Student tax return This applies regardless of the lien dates under local law. Student tax return Generally, this information is included on the settlement statement provided at the closing. Student tax return    If you (the seller) cannot deduct taxes until they are paid because you use the cash method of accounting, and the buyer of your property is personally liable for the tax, you are considered to have paid your part of the tax at the time of the sale. Student tax return This lets you deduct the part of the tax to the date of sale even though you did not actually pay it. Student tax return However, you must also include the amount of that tax in the selling price of the property. Student tax return The buyer must include the same amount in his or her cost of the property. Student tax return   You figure your deduction for taxes on each property bought or sold during the real property tax year as follows. Student tax return Worksheet 22-1. Student tax return Figuring Your Real Estate Tax Deduction 1. Student tax return Enter the total real estate taxes for the real property tax year   2. Student tax return Enter the number of days in the real property tax year that you owned the property   3. Student tax return Divide line 2 by 365 (for leap years, divide line 2 by 366) . Student tax return 4. Student tax return Multiply line 1 by line 3. Student tax return This is your deduction. Student tax return Enter it on Schedule A (Form 1040), line 6   Note. Student tax return Repeat steps 1 through 4 for each property you bought or sold during the real property tax year. Student tax return Your total deduction is the sum of the line 4 amounts for all of the properties. Student tax return Real estate taxes for prior years. Student tax return   Do not divide delinquent taxes between the buyer and seller if the taxes are for any real property tax year before the one in which the property is sold. Student tax return Even if the buyer agrees to pay the delinquent taxes, the buyer cannot deduct them. Student tax return The buyer must add them to the cost of the property. Student tax return The seller can deduct these taxes paid by the buyer. Student tax return However, the seller must include them in the selling price. Student tax return Examples. Student tax return   The following examples illustrate how real estate taxes are divided between buyer and seller. Student tax return Example 1. Student tax return Dennis and Beth White's real property tax year for both their old home and their new home is the calendar year, with payment due August 1. Student tax return The tax on their old home, sold on May 7, was $620. Student tax return The tax on their new home, bought on May 3, was $732. Student tax return Dennis and Beth are considered to have paid a proportionate share of the real estate taxes on the old home even though they did not actually pay them to the taxing authority. Student tax return On the other hand, they can claim only a proportionate share of the taxes they paid on their new property even though they paid the entire amount. Student tax return Dennis and Beth owned their old home during the real property tax year for 126 days (January 1 to May 6, the day before the sale). Student tax return They figure their deduction for taxes on their old home as follows. Student tax return Worksheet 22-1. Student tax return Figuring Your Real Estate Tax Deduction — Taxes on Old Home 1. Student tax return Enter the total real estate taxes for the real property tax year $620 2. Student tax return Enter the number of days in the real property tax year that you owned the property 126 3. Student tax return Divide line 2 by 365 (for leap years, divide line 2 by 366) . Student tax return 3452 4. Student tax return Multiply line 1 by line 3. Student tax return This is your deduction. Student tax return Enter it on Schedule A (Form 1040), line 6 $214 Since the buyers of their old home paid all of the taxes, Dennis and Beth also include the $214 in the selling price of the old home. Student tax return (The buyers add the $214 to their cost of the home. Student tax return ) Dennis and Beth owned their new home during the real property tax year for 243 days (May 3 to December 31, including their date of purchase). Student tax return They figure their deduction for taxes on their new home as follows. Student tax return Worksheet 22-1. Student tax return Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Student tax return Enter the total real estate taxes for the real property tax year $732 2. Student tax return Enter the number of days in the real property tax year that you owned the property 243 3. Student tax return Divide line 2 by 365 (for leap years, divide line 2 by 366) . Student tax return 6658 4. Student tax return Multiply line 1 by line 3. Student tax return This is your deduction. Student tax return Enter it on Schedule A (Form 1040), line 6 $487 Since Dennis and Beth paid all of the taxes on the new home, they add $245 ($732 paid less $487 deduction) to their cost of the new home. Student tax return (The sellers add this $245 to their selling price and deduct the $245 as a real estate tax. Student tax return ) Dennis and Beth's real estate tax deduction for their old and new homes is the sum of $214 and $487, or $701. Student tax return They will enter this amount on Schedule A (Form 1040), line 6. Student tax return Example 2. Student tax return George and Helen Brown bought a new home on May 3, 2013. Student tax return Their real property tax year for the new home is the calendar year. Student tax return Real estate taxes for 2012 were assessed in their state on January 1, 2013. Student tax return The taxes became due on May 31, 2013, and October 31, 2013. Student tax return The Browns agreed to pay all taxes due after the date of purchase. Student tax return Real estate taxes for 2012 were $680. Student tax return They paid $340 on May 31, 2013, and $340 on October 31, 2013. Student tax return These taxes were for the 2012 real property tax year. Student tax return The Browns cannot deduct them since they did not own the property until 2013. Student tax return Instead, they must add $680 to the cost of their new home. Student tax return In January 2014, the Browns receive their 2013 property tax statement for $752, which they will pay in 2014. Student tax return The Browns owned their new home during the 2013 real property tax year for 243 days (May 3 to December 31). Student tax return They will figure their 2014 deduction for taxes as follows. Student tax return Worksheet 22-1. Student tax return Figuring Your Real Estate Tax Deduction — Taxes on New Home 1. Student tax return Enter the total real estate taxes for the real property tax year $752 2. Student tax return Enter the number of days in the real property tax year that you owned the property 243 3. Student tax return Divide line 2 by 365 (for leap years, divide line 2 by 366) . Student tax return 6658 4. Student tax return Multiply line 1 by line 3. Student tax return This is your deduction. Student tax return Claim it on Schedule A (Form 1040), line 6 $501 The remaining $251 ($752 paid less $501 deduction) of taxes paid in 2014, along with the $680 paid in 2013, is added to the cost of their new home. Student tax return Because the taxes up to the date of sale are considered paid by the seller on the date of sale, the seller is entitled to a 2013 tax deduction of $931. Student tax return This is the sum of the $680 for 2012 and the $251 for the 122 days the seller owned the home in 2013. Student tax return The seller must also include the $931 in the selling price when he or she figures the gain or loss on the sale. Student tax return The seller should contact the Browns in January 2014 to find out how much real estate tax is due for 2013. Student tax return Form 1099-S. Student tax return   For certain sales or exchanges of real estate, the person responsible for closing the sale (generally the settlement agent) prepares Form 1099-S, Proceeds From Real Estate Transactions, to report certain information to the IRS and to the seller of the property. Student tax return Box 2 of Form 1099-S is for the gross proceeds from the sale and should include the portion of the seller's real estate tax liability that the buyer will pay after the date of sale. Student tax return The buyer includes these taxes in the cost basis of the property, and the seller both deducts this amount as a tax paid and includes it in the sales price of the property. Student tax return   For a real estate transaction that involves a home, any real estate tax the seller paid in advance but that is the liability of the buyer appears on Form 1099-S, box 5. Student tax return The buyer deducts this amount as a real estate tax, and the seller reduces his or her real estate tax deduction (or includes it in income) by the same amount. Student tax return See Refund (or rebate) , later. Student tax return Taxes placed in escrow. Student tax return   If your monthly mortgage payment includes an amount placed in escrow (put in the care of a third party) for real estate taxes, you may not be able to deduct the total amount placed in escrow. Student tax return You can deduct only the real estate tax that the third party actually paid to the taxing authority. Student tax return If the third party does not notify you of the amount of real estate tax that was paid for you, contact the third party or the taxing authority to find the proper amount to show on your return. Student tax return Tenants by the entirety. Student tax return   If you and your spouse held property as tenants by the entirety and you file separate federal returns, each of you can deduct only the taxes each of you paid on the property. Student tax return Divorced individuals. Student tax return   If your divorce or separation agreement states that you must pay the real estate taxes for a home owned by you and your spouse, part of your payments may be deductible as alimony and part as real estate taxes. Student tax return See Taxes and insurance in chapter 18 for more information. Student tax return Ministers' and military housing allowances. Student tax return   If you are a minister or a member of the uniformed services and receive a housing allowance that you can exclude from income, you still can deduct all of the real estate taxes you pay on your home. Student tax return Refund (or rebate). Student tax return   If you received a refund or rebate in 2013 of real estate taxes you paid in 2013, you must reduce your deduction by the amount refunded to you. Student tax return If you received a refund or rebate in 2013 of real estate taxes you deducted in an earlier year (either as an itemized deduction or an increase to your standard deduction), you generally must include the refund or rebate in income in the year you receive it. Student tax return However, the amount you include in income is limited to the amount of the deduction that reduced your tax in the earlier year. Student tax return For more information, see Recoveries in chapter 12. Student tax return Table 22-1. Student tax return Which Taxes Can You Deduct? Type of Tax You Can Deduct You Cannot Deduct Fees and Charges Fees and charges that are expenses of your trade or business or of producing income. Student tax return Fees and charges that are not expenses of your trade or business or of producing income, such as fees for driver's licenses, car inspections, parking, or charges for water bills (see Taxes and Fees You Cannot Deduct ). Student tax return     Fines and penalties. Student tax return Income Taxes State and local income taxes. Student tax return Federal income taxes. Student tax return   Foreign income taxes. Student tax return     Employee contributions to state funds listed under Contributions to state benefit funds . Student tax return Employee contributions to private or voluntary disability plans. Student tax return     State and local general sales taxes if you choose to deduct state and local income taxes. Student tax return General Sales Taxes State and local general sales taxes, including compensating use taxes. Student tax return State and local income taxes if you choose to deduct state and local general sales taxes. Student tax return Other Taxes Taxes that are expenses of your trade or business. Student tax return Federal excise taxes, such as tax on gasoline, that are not expenses of your trade or business or of producing income. Student tax return   Taxes on property producing rent or royalty income. Student tax return Per capita taxes. Student tax return   Occupational taxes. Student tax return See chapter 28. Student tax return     One-half of self-employment tax paid. Student tax return   Personal Property Taxes State and local personal property taxes. Student tax return Customs duties that are not expenses of your trade or business or of producing income. Student tax return Real Estate Taxes State and local real estate taxes. Student tax return Real estate taxes that are treated as imposed on someone else (see Division of real estate taxes between buyers and sellers ). Student tax return   Foreign real estate taxes. Student tax return Taxes for local benefits (with exceptions). Student tax return See Real Estate-Related Items You Cannot Deduct . Student tax return   Tenant's share of real estate taxes paid by  cooperative housing corporation. Student tax return Trash and garbage pickup fees (with exceptions). Student tax return See Real Estate-Related Items You Cannot Deduct . Student tax return     Rent increase due to higher real estate taxes. Student tax return     Homeowners' association charges. Student tax return Real Estate-Related Items You Cannot Deduct Payments for the following items generally are not deductible as real estate taxes. Student tax return Taxes for local benefits. Student tax return Itemized charges for services (such as trash and garbage pickup fees). Student tax return Transfer taxes (or stamp taxes). Student tax return Rent increases due to higher real estate taxes. Student tax return Homeowners' association charges. Student tax return Taxes for local benefits. Student tax return   Deductible real estate taxes generally do not include taxes charged for local benefits and improvements tending to increase the value of your property. Student tax return These include assessments for streets, sidewalks, water mains, sewer lines, public parking facilities, and similar improvements. Student tax return You should increase the basis of your property by the amount of the assessment. Student tax return   Local benefit taxes are deductible only if they are for maintenance, repair, or interest charges related to those benefits. Student tax return If only a part of the taxes is for maintenance, repair, or interest, you must be able to show the amount of that part to claim the deduction. Student tax return If you cannot determine what part of the tax is for maintenance, repair, or interest, none of it is deductible. Student tax return    Taxes for local benefits may be included in your real estate tax bill. Student tax return If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Student tax return You should use the rules above to determine if the local benefit tax is deductible. Student tax return Contact the taxing authority if you need additional information about a specific charge on your real estate tax bill. Student tax return Itemized charges for services. Student tax return    An itemized charge for services assessed against specific property or certain people is not a tax, even if the charge is paid to the taxing authority. Student tax return For example, you cannot deduct the charge as a real estate tax if it is: A unit fee for the delivery of a service (such as a $5 fee charged for every 1,000 gallons of water you use), A periodic charge for a residential service (such as a $20 per month or $240 annual fee charged to each homeowner for trash collection), or A flat fee charged for a single service provided by your government (such as a $30 charge for mowing your lawn because it was allowed to grow higher than permitted under your local ordinance). Student tax return    You must look at your real estate tax bill to determine if any nondeductible itemized charges, such as those listed above, are included in the bill. Student tax return If your taxing authority (or mortgage lender) does not furnish you a copy of your real estate tax bill, ask for it. Student tax return Exception. Student tax return   Service charges used to maintain or improve services (such as trash collection or police and fire protection) are deductible as real estate taxes if: The fees or charges are imposed at a like rate against all property in the taxing jurisdiction, The funds collected are not earmarked; instead, they are commingled with general revenue funds, and Funds used to maintain or improve services are not limited to or determined by the amount of these fees or charges collected. Student tax return Transfer taxes (or stamp taxes). Student tax return   Transfer taxes and similar taxes and charges on the sale of a personal home are not deductible. Student tax return If they are paid by the seller, they are expenses of the sale and reduce the amount realized on the sale. Student tax return If paid by the buyer, they are included in the cost basis of the property. Student tax return Rent increase due to higher real estate taxes. Student tax return   If your landlord increases your rent in the form of a tax surcharge because of increased real estate taxes, you cannot deduct the increase as taxes. Student tax return Homeowners' association charges. Student tax return   These charges are not deductible because they are imposed by the homeowners' association, rather than the state or local government. Student tax return Personal Property Taxes Personal property tax is deductible if it is a state or local tax that is: Charged on personal property, Based only on the value of the personal property, and Charged on a yearly basis, even if it is collected more or less than once a year. Student tax return A tax that meets the above requirements can be considered charged on personal property even if it is for the exercise of a privilege. Student tax return For example, a yearly tax based on value qualifies as a personal property tax even if it is called a registration fee and is for the privilege of registering motor vehicles or using them on the highways. Student tax return If the tax is partly based on value and partly based on other criteria, it may qualify in part. Student tax return Example. Student tax return Your state charges a yearly motor vehicle registration tax of 1% of value plus 50 cents per hundredweight. Student tax return You paid $32 based on the value ($1,500) and weight (3,400 lbs. Student tax return ) of your car. Student tax return You can deduct $15 (1% × $1,500) as a personal property tax because it is based on the value. Student tax return The remaining $17 ($. Student tax return 50 × 34), based on the weight, is not deductible. Student tax return Taxes and Fees You Cannot Deduct Many federal, state, and local government taxes are not deductible because they do not fall within the categories discussed earlier. Student tax return Other taxes and fees, such as federal income taxes, are not deductible because the tax law specifically prohibits a deduction for them. Student tax return See Table 22-1. Student tax return Taxes and fees that are generally not deductible include the following items. Student tax return Employment taxes. Student tax return This includes social security, Medicare, and railroad retirement taxes withheld from your pay. Student tax return However, one-half of self-employment tax you pay is deductible. Student tax return In addition, the social security and other employment taxes you pay on the wages of a household worker may be included in medical expenses that you can deduct or child care expenses that allow you to claim the child and dependent care credit. Student tax return For more information, see chapters 21 and 32. Student tax return Estate, inheritance, legacy, or succession taxes. Student tax return However, you can deduct the estate tax attributable to income in respect of a decedent if you, as a beneficiary, must include that income in your gross income. Student tax return In that case, deduct the estate tax as a miscellaneous deduction that is not subject to the 2%-of-adjusted-gross-income limit. Student tax return For more information, see Publication 559, Survivors, Executors, and Administrators. Student tax return Federal income taxes. Student tax return This includes income taxes withheld from your pay. Student tax return Fines and penalties. Student tax return You cannot deduct fines and penalties paid to a government for violation of any law, including related amounts forfeited as collateral deposits. Student tax return Gift taxes. Student tax return License fees. Student tax return You cannot deduct license fees for personal purposes (such as marriage, driver's, and dog license fees). Student tax return Per capita taxes. Student tax return You cannot deduct state or local per capita taxes. Student tax return Many taxes and fees other than those listed above are also nondeductible, unless they are ordinary and necessary expenses of a business or income producing activity. Student tax return For other nondeductible items, see Real Estate-Related Items You Cannot Deduct , earlier. Student tax return Where To Deduct You deduct taxes on the following schedules. Student tax return State and local income taxes. Student tax return    These taxes are deducted on Schedule A (Form 1040), line 5, even if your only source of income is from business, rents, or royalties. Student tax return Check box a on line 5. Student tax return General sales taxes. Student tax return   Sales taxes are deducted on Schedule A (Form 1040), line 5. Student tax return You must check box b on line 5. Student tax return If you elect to deduct sales taxes, you cannot deduct state and local income taxes on Schedule A (Form 1040), line 5, box a. Student tax return Foreign income taxes. Student tax return   Generally, income taxes you pay to a foreign country or U. Student tax return S. Student tax return possession can be claimed as an itemized deduction on Schedule A (Form 1040), line 8, or as a credit against your U. Student tax return S. Student tax return income tax on Form 1040, line 47. Student tax return To claim the credit, you may have to complete and attach Form 1116. Student tax return For more information, see chapter 37, the Form 1040 instructions, or Publication 514. Student tax return Real estate taxes and personal property taxes. Student tax return    Real estate and personal property taxes are deducted on Schedule A (Form 1040), lines 6 and 7, respectively, unless they are paid on property used in your business, in which case they are deducted on Schedule C, Schedule C-EZ, or Schedule F (Form 1040). Student tax return Taxes on property that produces rent or royalty income are deducted on Schedule E (Form 1040). Student tax return Self-employment tax. Student tax return    Deduct one-half of your self-employment tax on Form 1040, line 27. Student tax return Other taxes. Student tax return    All other deductible taxes are deducted on Schedule A (Form 1040), line 8. Student tax return Prev  Up  Next   Home   More Online Publications