Tests To Deduct Any Tax

The following two tests must be met for any tax to be deductible by you.

1. The tax must be imposed on you.
2. The tax must be paid during your tax year.

The tax must be imposed on you. Generally, you can deduct only taxes that are imposed on you.

Generally, you can deduct property taxes only if you are the property owner. If your spouse owns property and pays real estate taxes on it, the taxes are deductible on your spouse’s separate return or on your joint return.

The tax must be paid during your tax year. If you are a cash basis taxpayer, you can deduct only those taxes paid during the calendar year for which you file a return. If you pay your taxes by check, the day you mail or deliver the check is generally the date of payment. If you use a pay-by-phone account, the date reported on the statement of the financial institution showing when payment was made is the date of payment. If you contest a tax liability and use the cash method of accounting, you can deduct the tax only in the year it is actually paid.

If you use an accrual method of accounting, see Publication 538, Accounting Periods and Methods, for more information.

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