Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120809  
Subject: Re: Estimating State/Federal Taxes Date: 1/1/2002 7:15 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (10) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement