In which year is the Jan estimated state income tax deductible?

Not A Clue

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Dec 21, 2021, 11:02:22 AM12/21/21

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The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.

If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?

TIA

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ira smilovitz

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Dec 21, 2021, 11:37:42 AM12/21/21

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On Tuesday, December 21, 2021 at 11:02:22 AM UTC-5, Not A Clue wrote:
> The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.
>
> If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?
>
> TIA
>
> --

It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.

Ira Smilovitz, EA
Leonia, NJ

John Levine

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Dec 21, 2021, 3:15:04 PM12/21/21

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According to ira smilovitz <ira.sm...@gmail.com>:

>On Tuesday, December 21, 2021 at 11:02:22 AM UTC-5, Not A Clue wrote:
>> The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.
>>
>> If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?
>

>It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.

With the $10K limit on SALT deductions, and the $25K standard deduction for MFJ, how often does it make any difference?

I would think close to never. If you have enough deductions to be worth itemizing, you probably have paid $10K
of SALT long before the last estimated payment.

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Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly

Not A Clue

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Dec 21, 2021, 8:32:59 PM12/21/21

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On Tuesday, December 21, 2021 at 3:15:04 PM UTC-5, John Levine wrote:
> According to ira smilovitz <ira.sm...@gmail.com>:
> >On Tuesday, December 21, 2021 at 11:02:22 AM UTC-5, Not A Clue wrote:
> >> The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.
> >>
> >> If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?
> >
> >It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.
> With the $10K limit on SALT deductions, and the $25K standard deduction for MFJ, how often does it make any difference?
>
> I would think close to never. If you have enough deductions to be worth itemizing, you probably have paid $10K
> of SALT long before the last estimated payment.
>
>
> --
> Regards,
> John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
> Please consider the environment before reading this e-mail. https://jl.ly
> --

I was thinking of the potential increase in the cap on SALT; but it looks unlikely to pass this year. Does anyone think that f it pass early in 2022 that it would be effective as of 2021?

TIA

ira smilovitz

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Dec 22, 2021, 10:36:03 AM12/22/21

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On Tuesday, December 21, 2021 at 3:15:04 PM UTC-5, John Levine wrote:

> According to ira smilovitz <ira.sm...@gmail.com>:
> >On Tuesday, December 21, 2021 at 11:02:22 AM UTC-5, Not A Clue wrote:
> >> The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.
> >>
> >> If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?
> >
> >It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.
> With the $10K limit on SALT deductions, and the $25K standard deduction for MFJ, how often does it make any difference?
>
> I would think close to never. If you have enough deductions to be worth itemizing, you probably have paid $10K
> of SALT long before the last estimated payment.
>
>
> --
> Regards,
> John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
> Please consider the environment before reading this e-mail. https://jl.ly
> --

You are correct that it rarely makes a difference with the SALT cap, but the cap is only temporary (it is scheduled to sunset in 2025) and my clients tend to be repeat clients. I like to keep them trained to do things that make my life easier.

Ira Smilovitz, EA
Leonia, NJ

JoeTaxpayer

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Dec 24, 2021, 12:02:48 PM12/24/21

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On 12/21/21 8:28 PM, Not A Clue wrote:
> On Tuesday, December 21, 2021 at 3:15:04 PM UTC-5, John Levine wrote:
>> According to ira smilovitz <ira.sm...@gmail.com>:
>>> On Tuesday, December 21, 2021 at 11:02:22 AM UTC-5, Not A Clue wrote:
>>>> The 4th Q estimated State income taxes for 2021 is payable in Jan 2022.
>>>>
>>>> If a cash tax payer itemize his deductions, is that 4th Q payment for 2021 deductible in 2022? Or 2021?
>>>
>>> It's deductible in the year paid, not the year it applies to. For that reason, I recommend that my clients make their Q4 state estimated payments before December 31.
>> With the $10K limit on SALT deductions, and the $25K standard deduction for MFJ, how often does it make any difference?
>>
>> I would think close to never. If you have enough deductions to be worth itemizing, you probably have paid $10K
>> of SALT long before the last estimated payment.
>>
>>
>> --
>> Regards,
>> John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
>> Please consider the environment before reading this e-mail. https://jl.ly
>> --
>
> I was thinking of the potential increase in the cap on SALT; but it looks unlikely to pass this year. Does anyone think that f it pass early in 2022 that it would be effective as of 2021?
>
> TIA
>

I am keeping optimistic that it will retroactive as long as it passes in
Q1. SALT cap hit me hard, and I am not a 1%er. I just live in a town
with high property tax. Friend a few towns over, has a similar value
house and his tax is 1/2 mine.

Maria Ku

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Dec 27, 2021, 5:17:00 PM12/27/21

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It will start making a difference again in 2026 when the 2017 change to individual tax law, including the SALT cap, sunset.

Scott Seligman

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Dec 28, 2021, 7:02:46 PM12/28/21

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ira smilovitz <ira.sm...@gmail.com> writes:

>>>It's deductible in the year paid, not the year it applies to. For
>>>that reason, I recommend that my clients make their Q4 state
>>>estimated payments before December 31.
>>
>> With the $10K limit on SALT deductions, and the $25K standard
>> deduction for MFJ, how often does it make any difference?
>

> You are correct that it rarely makes a difference with the SALT cap,
> but the cap is only temporary (it is scheduled to sunset in 2025) and
> my clients tend to be repeat clients. I like to keep them trained to
> do things that make my life easier.

Raising the SALT cap was being discussed in the negotiations around
the BBB legislation that did not pass this year. Conceivably it could
pass in some form next year.

If you're in a position where a state tax payment in December would not
be deductible under current rules, but might be deductible in January if
they raise the cap in 2022, then it probably makes sense to delay the payment
until January just in case.

Of course there are other possibile things Congress could do such as
raising the cap retroatively, or inventing new ways to penalize anyone
paying state taxes next January, but those are far less likely to happen.

Scott