Rental Expense?

[Ken]

Its been a LONG time since I first visited this site, but I have a few minutes before my next client comes in. ANYWAY I just wanted to say I agree with Senior member, State taxes are not an expense on rental property, they would have to be deducted on schedule A as an itemized deduction.Period

[taxea]

It would be a deduction on Sch A for State income tax paid. If she files a Sch E for her rentals it is a tax paid deduction.

[taxea]

Same reason a Self employed individual cannot deduct taxes paid to the IRS. No deduction.

Chris

The irs allows a deduction for state taxes paid...does it not?

[FEDUKE404]

Deduction of state taxes

The irs allows a deduction for state taxes paid...does it not?

Last time I checked, not as a rental expense or as a Schedule C expense. . .

FE

[FEDUKE404]

Please clarify

It would be a deduction on Sch A for State income tax paid. If she files a Sch E for her rentals it is a tax paid deduction.

Are you really implying that a person can take their personal income tax paid as an expense deduction to offset gross rental income on a Schedule E ? ?

FE

[taxea]

Last time I checked, not as a rental expense or as a Schedule C expense. . .

FE

State Tax on Sch C or Sch E income would be an ordinary and necessary expense of the "business".

[RitaB]

Yeah, but

From Pub 535:

"State and local income taxes. A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040).
However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense."

[FEDUKE404]

From Pub 535:

"State and local income taxes. A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040).
However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense."

I can't believe this topic is not CLOSED.

The original comment was about a person who had a "small amount" of income tax and apparently wanted to deduct that personal income tax as a Schedule E rental expense.

NO. . .NO. . .NO. . .NO !!!

Granted, as you cited, there are legitimate "business taxes" on rental activities which likely can be used to offset business income. But using personal income taxes on a Schedule E? Good grief!

And there was no mention the rental property of the lady was a corporation or partnership, which does fly by somewhat different rules.

A tax pro would really support deducting of personal income taxes as a Schedule E business deduction?? Still SMH on that one. . . . . .

Enough time on this topic. Work to do.

FE

[RitaB]

State Tax on Sch C or Sch E income would be an ordinary and necessary expense of the "business".

Did you READ MY TITLE: "YEAH BUT" ?

From Pub 535:

"State and local income taxes. A corporation or partnership can deduct state and local income taxes imposed on the corporation or partnership as business expenses. An individual can deduct state and local income taxes only as an itemized deduction on Schedule A (Form 1040). However, an individual can deduct a state tax on gross income (as distinguished from net income) directly attributable to a trade or business as a business expense."

I can't believe this topic is not CLOSED...

A tax pro would really support deducting of personal income taxes as a Schedule E business deduction??

FE

I agree. I'm on your side. Hello? Super Mom cannot deduct state income tax on Sch E. I also don't know why my first post didn't catch on:

https://www.irs.gov/taxtopics/tc503.html

I guess I will read it out loud:

Topic 503 - Deductible Taxes

There are four types of deductible nonbusiness taxes:
•State, local, and foreign income taxes
•State and local general sales taxes
•State, local, and foreign real estate taxes, and
•State and local personal property taxes

To be deductible, the tax must be imposed on you and you must have paid it during your tax year. Taxes may be claimed only as an itemized deduction on Form 1040, Schedule A (PDF), Itemized Deductions.