Tax season is a tough time for all Americans, but those who
pay state taxes as well as federal taxes have an added burden.
What many don't know, though, is that they might be able to use
state-tax payments as a deduction on their federal returns.
In the following video, Dan Caplinger, The Motley Fool's
director of investment planning, looks at state tax deductions.
Dan notes that you can itemize certain state tax payments, making
them available to anyone who doesn't take the standard deduction.
Unfortunately, you have to choose between a sales tax deduction
and an income tax deduction, with those who have to pay both only
getting to take one. Dan runs through the rules for claiming
these tax deductions, pointing out that for income taxes, you can
only deduct what you actually pay, but for the sales-tax
deduction, you can use special IRS tables rather than having to
calculate every single purchase you made. For high-income
taxpayers, though, the Alternative Minimum Tax can take away your
state tax deduction.
Is Uncle Sam about to claim 40% of your hard-earned
Thanks to a 2013 law called the American Taxpayer Relief Act,
he can -- and
-- if you aren't properly prepared.
Fortunately, The Motley Fool recently uncovered an arsenal
of little-known loopholes to protect yourself from ATRA and
help keep the taxman at bay when he inevitably comes calling.
We reveal them all in a brand-new special report. Simply click
the link below for instant,
Protect your hard-earned wealth from Uncle
Protect your hard-earned wealth from Uncle Sam.
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