The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Estimating State/Federal Taxes||Date: 1/1/2002 7:15 PM|
|Author: Mark0Young||Number: 56583 of 121112|
Huh. OK, then while it's no longer that important to me, I'm curious: how are you expected to do this, without running into the catch-22 I described earlier?
This is how it works in Oregon:
Federal income taxes:
Next month, when I work on my Year 2001 income tax returns, what I can itemize on Schedule A are state income taxes I actually paid during calendar year 2001. The Oregon state taxes I paid in 2001 are the state taxes that were withheld from my paycheck, plus the money I had to send in with my 2000 Oregon State tax returns I filed in February 2001. (The flip side of itemizing state income tax is that any refund I get from the state the following year counts as that following year's income.)
So I can always figure out my federal returns before I even begin with my state returns. In fact, the Oregon State Form 40 instructions specifically say to figure out federal taxes first.
Oregon State income taxes:
What Oregon state allows me to deduct on my Year 2001 State Income Tax Return is my federal tax obligation for Year 2001. I don't have Year 2001 Form 1040 in front of me, but on the Year 2000 Form 1040, this is line 57 "This is your total tax". So I can use this "total tax", up to a limit (last year up to $3,000, a recent ballot measure raised the limit), as a "subtraction" (deduction) on my Oregon state tax forms.
(Watch out if you aren't in Oregon--it doesn't make sense to me that we use the "total tax" instead of the federal taxes actually paid, but then what do you expect from state legislatures that usually meet just every other year?)
Fortunately, most of my income is from salary so my W-4 filings with my employer gets the withholding close enough, and then for the next 20 years it has been just minor tweaking from year to year in the "additional tax to withhold" box to get my tax returns to come out pretty close.
|Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us|