State taxes paid 8 years late

You can deduct actual state income taxes paid. It doesn't matter
that you pay late. You can't deduct your late payment penalties
but it sounds as though you didn't have any.

--
<< ------------------------------------------------------- >>
<< nor can it used, for the purpose of avoiding penalties  >>
<<                                                         >>
<<  to this newsgroup as well as our anti-spamming policy  >>
<<         Copyright (2007) - All rights reserved.         >>

The deduction is for the year in which you paid the state income
taxes. Your question implies that you made that payment sometime this
month.

--
<< ------------------------------------------------------- >>
<< nor can it used, for the purpose of avoiding penalties  >>
<<                                                         >>
<<  to this newsgroup as well as our anti-spamming policy  >>
<<         Copyright (2007) - All rights reserved.         >>

Phil, you didn't make it clear exactly when your wife took the
distribution from her 401(k).  If she took it while she was a Colorado
resident, it was properly subject to Colorado tax.  If she didn't take
the distribution until after she moved to Florida, Colorado did not
have the power to tax that income.  Federal law (4 USC Sec. 114)
prohibits states from taxing nonresidents on certain kinds of
retirement income; distributions from Sec. 401 plans, including 401(k)
s, are among the protected kinds of income.  This law applies to
distributions received on or after January 1, 1996.  It does not
matter where she performed the services to earn the income that was
contributed to the plan.

Also I wonder about the statute of limitations on the Colorado
assessment.  Did you file a timely part-year resident Colorado return
for 2001?  Was the 401(k) distribution disclosed on that return?  If
the answers to those questions are yes, the Colorado assessment may
have been time barred.  I hope you had professional help in dealing
with this matter with Colorado.

As for deducting the tax, as a cash method taxpayer you deduct state
taxes when you pay them.  It doesn't matter what year they apply to.
Yes, you can deduct the tax on your 2009 federal return.  Just
remember that state taxes, like some other itemized deductions, are
not deductible for AMT purposes, so the deduction may put you into an
AMT.

Katie in San Diego

--
<< ------------------------------------------------------- >>
<< nor can it used, for the purpose of avoiding penalties  >>
<<                                                         >>
<<  to this newsgroup as well as our anti-spamming policy  >>
<<         Copyright (2007) - All rights reserved.         >>