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• Funds used to maintain or improve serv- and other employment taxes you pay on Foreign income taxes. Generally, income
ices aren’t limited to or determined by the the wages of a household worker may be taxes you pay to a foreign country or U.S. pos-
amount of these fees or charges collected. included in medical expenses that you can session can be claimed as an itemized deduc-
Transfer taxes (or stamp taxes). Transfer deduct, or childcare expenses that allow tion on Schedule A (Form 1040), line 6, or as a
you to claim the child and dependent care
credit against your U.S. income tax on Sched-
taxes and similar taxes and charges on the sale credit. For more information, see Pub. 502, ule 3 (Form 1040), line 1. To claim the credit,
of a personal home aren’t deductible. If they are Medical and Dental Expenses, and Pub. you may have to complete and attach Form
paid by the seller, they are expenses of the sale 503, Child and Dependent Care Expenses. 1116. For more information, see the Instructions
and reduce the amount realized on the sale. If for Forms 1040 and 1040-SR, or Pub. 514.
paid by the buyer, they are included in the cost
basis of the property. • Estate, inheritance, legacy, or succes- Real estate taxes and personal property
Rent increase due to higher real estate sion taxes. You can deduct the estate tax taxes. Real estate and personal property taxes
attributable to income in respect of a dece-
are deducted on Schedule A (Form 1040), lines
taxes. If your landlord increases your rent in dent if you, as a beneficiary, must include 5b and 5c, respectively, unless they are paid on
the form of a tax surcharge because of in- that income in your gross income. In that property used in your business, in which case
creased real estate taxes, you can’t deduct the case, deduct the estate tax on Schedule A they are deducted on Schedule C (Form 1040)
increase as taxes. (Form 1040), line 16. For more information, or Schedule F (Form 1040). Taxes on property
Homeowners' association charges. These see Pub. 559, Survivors, Executors, and that produces rent or royalty income are deduc-
charges aren’t deductible because they are im- Administrators. ted on Schedule E (Form 1040).
posed by the homeowners' association, rather • Federal income taxes. This includes in- Self-employment tax. Deduct one-half of your
than the state or local government. come taxes withheld from your pay. self-employment tax on Schedule 1 (Form
Personal Property • Fines and penalties. You can’t deduct 1040), line 14.
fines and penalties paid to a government
Other taxes. All other deductible taxes are de-
Taxes for violation of any law, including related ducted on Schedule A (Form 1040), line 6.
amounts forfeited as collateral deposits.
Personal property tax is deductible if it is a state • Foreign personal or real property
or local tax that is: taxes.
• Charged on personal property; • Gift taxes.
• Based only on the value of the personal • License fees. You can’t deduct license
property; and fees for personal purposes (such as mar- 12.
• Charged on a yearly basis, even if it is col- riage, driver's, and pet license fees).
lected more or less than once a year. • Per capita taxes. You can’t deduct state
or local per capita taxes. Other Itemized
A tax that meets the above requirements
can be considered charged on personal prop- Many taxes and fees other than those listed
erty even if it is for the exercise of a privilege. above are also nondeductible, unless they are Deductions
For example, a yearly tax based on value quali- ordinary and necessary expenses of a business
fies as a personal property tax even if it is called or income-producing activity. For other nonde-
a registration fee and is for the privilege of reg- ductible items, see Real Estate-Related Items
istering motor vehicles or using them on the You Can’t Deduct, earlier. What's New
highways.
If the tax is partly based on value and partly Where To Deduct Standard mileage rate. The 2020 rate for
based on other criteria, it may qualify in part. business use of a vehicle is 57.5 cents a mile.
You deduct taxes on the following schedules.
Example. Your state charges a yearly mo- Educator expenses. Educator expenses in-
tor vehicle registration tax of 1% of value plus State and local income taxes. These taxes clude amounts paid or incurred after March 12,
50 cents per hundredweight. You paid $32 are deducted on Schedule A (Form 1040), 2020, for personal protective equipment, disin-
based on the value ($1,500) and weight (3,400 line 5a, even if your only source of income is fectant, and other supplies used for the preven-
lbs.) of your car. You can deduct $15 (1% × from business, rents, or royalties. tion of the spread of coronavirus. For more in-
$1,500) as a personal property tax because it is formation, see the instructions for Schedule 1
based on the value. The remaining $17 ($0.50 × Limitation on deduction for state and lo- (Form 1040), line 10 and Educator Expenses in
34), based on the weight, isn’t deductible. cal taxes. The deduction for state and local Pub. 529, Miscellaneous Deductions.
taxes is limited to $10,000 ($5,000 if married fil-
are the taxes that you include on Schedule A Reminders
Taxes and Fees ing married separately). State and local taxes
You Can’t Deduct (Form 1040), lines 5a, 5b, and 5c. Include taxes No miscellaneous itemized deductions al-
imposed by a U.S. possession with your state
Many federal, state, and local government and local taxes on Schedule A (Form 1040), lowed. You can no longer claim any miscella-
lines 5a, 5b, and 5c. However, don't include any
taxes aren’t deductible because they don’t fall neous itemized deductions. Miscellaneous
within the categories discussed earlier. Other U.S. possession taxes you paid that are alloca- itemized deductions are those deductions that
ble to excluded income.
taxes and fees, such as federal income taxes, would have been subject to the 2%-of-adjus-
aren’t deductible because the tax law specifi- You may want to take a credit for U.S. ted-gross-income (AGI) limitation. See Miscel-
cally prohibits a deduction for them. See Ta- TIP possession tax instead of a deduction. laneous Itemized Deductions, later.
ble 11-1. See the instructions for Schedule 3 Fines and penalties. Rules regarding deduct-
(Form 1040), line 1, for details. ing fines and penalties have changed. See
Taxes and fees that are generally not de-
ductible include the following items. General sales taxes. Sales taxes are deduc- Fines and Penalties, later.
• Employment taxes. This includes social ted on Schedule A (Form 1040), line 5a. You
security, Medicare, and railroad retirement must check the box on line 5a. If you elect to Introduction
taxes withheld from your pay. However, deduct sales taxes, you can’t deduct state and
one-half of self-employment tax you pay is local income taxes on Schedule A (Form 1040), This chapter explains that you can no longer
deductible. In addition, the social security line 5a. claim any miscellaneous itemized deductions,
Page 98 Chapter 12 Other Itemized Deductions