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I paid $775 in self employment taxes in 12/2021. These were taxes deferred from 2020. Can I deduct this amount on my 2021 return as a business expense?

Forum|Forum|4 years ago
April 11, 2022
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Some details: on my 2020 return, I was able to defer my self employment taxes. I paid half if this deferral ($775) in December 2021. Can I deduct this amount as a business expense on my 2021 return. Note: I am still self employed.

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Best answer by MinhT1

No.

The deferred self-employment tax paid in 2021 is not deductible on your 2021 tax return.

M

MinhT1Answer

No.

The deferred self-employment tax paid in 2021 is not deductible on your 2021 tax return.

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Kollistim1Author

Can you explain why I can't deduct it on my 2021 tax return. It was a tax I paid in 2021 and it had not been deducted in 2020.

M

MinhT1

Your 2020 self-employment tax is a tax liability for tax year 2020. You had to pay it for tax year 2020. The deferment of half of the tax was only a payment facility for you. That tax was not deductible or deducted in 2020.

Federal tax payments are never deductible.

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Kollistim1Author

I have another question: I sold my rental property in February 2021. I made some capital improvements in January 2021 -- new heating system, water filtration system. During this time the property was vacant and not available for rent. Where do I add these capital improvements to increase the basis of my rental. Do I change the capital basis that was transferred automatically from my 2020 return?

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Vanessa A

Yes, you would just increase the capital basis that was transferred from your 2020 return.

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Kollistim1Author

That seems to be the easiest way to do it. Thank you. I also had some repair costs. Can these be part of the expenses involved in selling the vacant rental property? These are items such as cleaning, repairing the roof, painting the deck etc. I am already deducting expenses such as commissions and other traditional closing costs such as attorney fees. Can I also include repair costs as part of the costs associated with the sale of the property?