State Tax Deductions on NIIT

Forum|Forum|5 years ago
March 15, 2021
1 reply
0 views

Where to enter State Tax deduction for NIIT tax?

TurboTax Live Deluxe Online

DaveF1006

It depends. If you have a 8960 in your return, the NIIT should have been populated automatically in the return. Please read this IRS link for the instructions regarding 9b. it suggests that this is added to state, local and property taxes. You can only claim this if you itemize your deductions for the year. This amount is capped at $10K for all these types of taxes paid.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

tacopa

To clarify what you said: If I don't itemize, and use the standard deduction, I can not deduct State Tax I paid against the net investment income.

Is there an official document that clearly says that state tax deduction is applicable only when you itemize, and not when you take standard deduction? What I see is "properly allocable" term, and no one is explicitly saying that this is applicable when you take itemized deductions.

Can you please help me point to the document that made this interpretation? Thanks.

ReneeM7122

Please refer to IRS Topic No. 503, Deductible Taxes

There are four types of deductible nonbusiness taxes:

State, local, and foreign income taxes
State and local general sales taxes
State and local real estate taxes, and
State and local personal property taxes

To be deductible, the tax must be imposed on you, and you must have paid it during your tax year. Nonbusiness taxes may only be claimed as an itemized deduction on Schedule A (Form 1040), Itemized Deductions.

@tacopa