Squeeze In An Extra Tax Deduction This Year

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When to pay state and city estimated taxes by the end of the year

If you pay quarterly estimated taxes and if you won't fall under the alternate minimum tax rule for 2006, you can squeeze in an extra federal tax deduction for this year by paying your estimated state and city taxes before the end of the year.



Although the due date for your last estimated tax payment is January 15, you can only deduct tax payments in the year the payment was actually paid. So, if you wait until January 15, 2007 to pay your 2006 estimated state and city tax, you won't be able to take the deduction on your 2006 return. Instead, you'll have to wait until 2008 when you file your 2007 return to take the deduction.

To avoid this situation, be sure to make your last state estimated tax payment by December 31 unless doing so could cause you to have to pay the Alternate Minimum Tax. If you're not sure, ask your accountant.

About the author:
Janet Attard is the founder of the award-winning  Business Know-How small business web site and information resource. Janet is also the author of The Home Office And Small Business Answer Book and of Business Know-How: An Operational Guide For Home-Based and Micro-Sized Businesses with Limited Budgets.  Follow Janet on Twitter at http://www.twitter.com/JanetAttard.

 
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