Are tax years 2016 & 2017 back taxes deductible for tax year 2018?
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If someone, in 2018, pays taxes, including interest and penalties, owed for tax years 2016 and 2017, then can that person claim a deduction for the paid taxes, only the original amount and no the taxes and fees, for their income for fiscal year 2018?
For example, suppose the person has gross income of $100k and owed $20k in both tax years 2016 and 2017, for a total owed taxes of $40k, but does not pay them on time. IRS imposes late penalty & interest fee of $5k until the person pays IRS total owed $45k in 2018. Person has gross income of $100k in 2018. Can the person claim $40k deduction for paying prior year federal taxes in the 2018 1040?
Any references are appreciated.
united-states tax-deduction
asked Apr 7 at 19:48
2q.2q.
376
add a comment |
If someone, in 2018, pays taxes, including interest and penalties, owed for tax years 2016 and 2017, then can that person claim a deduction for the paid taxes, only the original amount and no the taxes and fees, for their income for fiscal year 2018?
For example, suppose the person has gross income of $100k and owed $20k in both tax years 2016 and 2017, for a total owed taxes of $40k, but does not pay them on time. IRS imposes late penalty & interest fee of $5k until the person pays IRS total owed $45k in 2018. Person has gross income of $100k in 2018. Can the person claim $40k deduction for paying prior year federal taxes in the 2018 1040?
Any references are appreciated.
united-states tax-deduction
asked Apr 7 at 19:48
2q.2q.
376
add a comment |
If someone, in 2018, pays taxes, including interest and penalties, owed for tax years 2016 and 2017, then can that person claim a deduction for the paid taxes, only the original amount and no the taxes and fees, for their income for fiscal year 2018?
For example, suppose the person has gross income of $100k and owed $20k in both tax years 2016 and 2017, for a total owed taxes of $40k, but does not pay them on time. IRS imposes late penalty & interest fee of $5k until the person pays IRS total owed $45k in 2018. Person has gross income of $100k in 2018. Can the person claim $40k deduction for paying prior year federal taxes in the 2018 1040?
Any references are appreciated.
united-states tax-deduction
asked Apr 7 at 19:48
2q.2q.
376
If someone, in 2018, pays taxes, including interest and penalties, owed for tax years 2016 and 2017, then can that person claim a deduction for the paid taxes, only the original amount and no the taxes and fees, for their income for fiscal year 2018?
For example, suppose the person has gross income of $100k and owed $20k in both tax years 2016 and 2017, for a total owed taxes of $40k, but does not pay them on time. IRS imposes late penalty & interest fee of $5k until the person pays IRS total owed $45k in 2018. Person has gross income of $100k in 2018. Can the person claim $40k deduction for paying prior year federal taxes in the 2018 1040?
Any references are appreciated.
united-states tax-deduction
united-states tax-deduction
asked Apr 7 at 19:48
2q.2q.
376
asked Apr 7 at 19:48
2q.2q.
376
edited Apr 8 at 4:28
2q.
asked Apr 7 at 19:48
2q.2q.
376
asked Apr 7 at 19:48
2q.2q.
376
asked Apr 7 at 19:48
2q.2q.
376
376
add a comment |
add a comment |
3 Answers
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No! You can't take a tax deducton on tax*. Which is what the $40k is.
Tax isn't normally tax deductible when you pay it on time. Paying it late doesn't somehow make it more deductible.
Whether those interest and penalties are deductible is another question, but the same answer.
* You can often deduct taxes paid to other entities, such as your state or another country.
answered Apr 7 at 21:48
HarperHarper
25.2k63789
add a comment |
If this was allowed, why would you pay taxes on time? For simplicity suppose that over three years income was 100k each year, and tax 20%. Normally, you would pay 20k each year for a total of 60k.
Now suppose you don't pay the first two years and pay 45k on the third one, including the penalty. If you were allowed to deduct the 45k, now the tax for the third year would be 20% of 55k, so 11k. The total paid would 45k+11k=56k, so not paying taxes in time would save you money.
The above effect would be more pronounced if we consider marginal tax.
No serious government can allow that (I've seen things like that happen in some shady places, but that's precisely one of the reasons they are shady and people evade taxes).
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
add a comment |
It looks like federal back taxes are not deductible on the following year's federal tax return. I guess this makes sense since from gov's point of view they were owed to begin with so no reason to be able to deduct them.
answered Apr 7 at 20:20
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376
add a comment |
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3 Answers
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active
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3 Answers
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No! You can't take a tax deducton on tax*. Which is what the $40k is.
Tax isn't normally tax deductible when you pay it on time. Paying it late doesn't somehow make it more deductible.
Whether those interest and penalties are deductible is another question, but the same answer.
* You can often deduct taxes paid to other entities, such as your state or another country.
answered Apr 7 at 21:48
HarperHarper
25.2k63789
add a comment |
No! You can't take a tax deducton on tax*. Which is what the $40k is.
Tax isn't normally tax deductible when you pay it on time. Paying it late doesn't somehow make it more deductible.
Whether those interest and penalties are deductible is another question, but the same answer.
* You can often deduct taxes paid to other entities, such as your state or another country.
answered Apr 7 at 21:48
HarperHarper
25.2k63789
add a comment |
No! You can't take a tax deducton on tax*. Which is what the $40k is.
Tax isn't normally tax deductible when you pay it on time. Paying it late doesn't somehow make it more deductible.
Whether those interest and penalties are deductible is another question, but the same answer.
* You can often deduct taxes paid to other entities, such as your state or another country.
answered Apr 7 at 21:48
HarperHarper
25.2k63789
No! You can't take a tax deducton on tax*. Which is what the $40k is.
Tax isn't normally tax deductible when you pay it on time. Paying it late doesn't somehow make it more deductible.
Whether those interest and penalties are deductible is another question, but the same answer.
* You can often deduct taxes paid to other entities, such as your state or another country.
answered Apr 7 at 21:48
HarperHarper
25.2k63789
answered Apr 7 at 21:48
HarperHarper
25.2k63789
answered Apr 7 at 21:48
HarperHarper
25.2k63789
answered Apr 7 at 21:48
HarperHarper
25.2k63789
25.2k63789
add a comment |
add a comment |
If this was allowed, why would you pay taxes on time? For simplicity suppose that over three years income was 100k each year, and tax 20%. Normally, you would pay 20k each year for a total of 60k.
Now suppose you don't pay the first two years and pay 45k on the third one, including the penalty. If you were allowed to deduct the 45k, now the tax for the third year would be 20% of 55k, so 11k. The total paid would 45k+11k=56k, so not paying taxes in time would save you money.
The above effect would be more pronounced if we consider marginal tax.
No serious government can allow that (I've seen things like that happen in some shady places, but that's precisely one of the reasons they are shady and people evade taxes).
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
add a comment |
If this was allowed, why would you pay taxes on time? For simplicity suppose that over three years income was 100k each year, and tax 20%. Normally, you would pay 20k each year for a total of 60k.
Now suppose you don't pay the first two years and pay 45k on the third one, including the penalty. If you were allowed to deduct the 45k, now the tax for the third year would be 20% of 55k, so 11k. The total paid would 45k+11k=56k, so not paying taxes in time would save you money.
The above effect would be more pronounced if we consider marginal tax.
No serious government can allow that (I've seen things like that happen in some shady places, but that's precisely one of the reasons they are shady and people evade taxes).
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
add a comment |
If this was allowed, why would you pay taxes on time? For simplicity suppose that over three years income was 100k each year, and tax 20%. Normally, you would pay 20k each year for a total of 60k.
Now suppose you don't pay the first two years and pay 45k on the third one, including the penalty. If you were allowed to deduct the 45k, now the tax for the third year would be 20% of 55k, so 11k. The total paid would 45k+11k=56k, so not paying taxes in time would save you money.
The above effect would be more pronounced if we consider marginal tax.
No serious government can allow that (I've seen things like that happen in some shady places, but that's precisely one of the reasons they are shady and people evade taxes).
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
If this was allowed, why would you pay taxes on time? For simplicity suppose that over three years income was 100k each year, and tax 20%. Normally, you would pay 20k each year for a total of 60k.
Now suppose you don't pay the first two years and pay 45k on the third one, including the penalty. If you were allowed to deduct the 45k, now the tax for the third year would be 20% of 55k, so 11k. The total paid would 45k+11k=56k, so not paying taxes in time would save you money.
The above effect would be more pronounced if we consider marginal tax.
No serious government can allow that (I've seen things like that happen in some shady places, but that's precisely one of the reasons they are shady and people evade taxes).
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
edited Apr 8 at 15:06
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
answered Apr 8 at 6:38
Martin ArgeramiMartin Argerami
1455
1455
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
New contributor
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Martin Argerami is a new contributor to this site. Take care in asking for clarification, commenting, and answering.
Check out our Code of Conduct.
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
add a comment |
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
Indeed. I'll edit that into the answer, if you don't mind.
– Martin Argerami
Apr 8 at 15:05
add a comment |
It looks like federal back taxes are not deductible on the following year's federal tax return. I guess this makes sense since from gov's point of view they were owed to begin with so no reason to be able to deduct them.
answered Apr 7 at 20:20
2q.2q.
376
add a comment |
It looks like federal back taxes are not deductible on the following year's federal tax return. I guess this makes sense since from gov's point of view they were owed to begin with so no reason to be able to deduct them.
answered Apr 7 at 20:20
2q.2q.
376
add a comment |
It looks like federal back taxes are not deductible on the following year's federal tax return. I guess this makes sense since from gov's point of view they were owed to begin with so no reason to be able to deduct them.
answered Apr 7 at 20:20
2q.2q.
376
It looks like federal back taxes are not deductible on the following year's federal tax return. I guess this makes sense since from gov's point of view they were owed to begin with so no reason to be able to deduct them.
answered Apr 7 at 20:20
2q.2q.
376
answered Apr 7 at 20:20
2q.2q.
376
answered Apr 7 at 20:20
2q.2q.
376
answered Apr 7 at 20:20
2q.2q.
376
376
add a comment |
add a comment |
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