I think you must misunderstand the NY itemized deduction. Your state taxes are a deduction if you itemize on your federal return, but I've never heard of federal taxes being deductible on a state return. I had a quick look at the NY form, and it looks like the NY itemized deduction is more or less the same as it is in other states: you start with the federal deduction, then subtract state taxes included. That is, the NY deduction consists of all the federal deductions except for state income tax. Ok, I'm not a NY resident - but where in your form do you see anything about taking a state deduction for federal taxes?