The 1040 instruction book page A-2 for line 5 states that "State and local estimated tax payments made during 2007..." can be deducted so my understanding is that would included ones first 3 estimated payments for tax year 2007 but does it also include the fourth estimated payment for 2006 that I made in Jan 2007?
Correct: I presume you're talking about your STATE estimated tax to deduct on your FED return? If so, only paymets made in the tax year are deductible, not the 4th payment made in the following year. It's deducted in the following year.
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Yes that is what I was referring to, thanks for your answer.
your FED return? If so, only paymets made in the tax year
If you're using accrual based accounting does the answer remain the same?
todeducton your FED return? If so, only paymets made in the tax year
Yes, the answer is the same for the estimated tax payment due January 15 (or
15 days after the close of the tax year).
Why wouldn't an accrual basis taxpayer deduct the state tax in the year accrued, rather than in the year paid? Is there some specific exception for this deduction?
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