Question

Meade paid $5,000 of state income taxes in 2016. The total actual sales taxes paid during 2016 was $4,500, which did not include $3,000 for the sales taxes paid in 2016 on Meade's new boat. How should Meade treat the taxes paid in his 2016 tax return

Answer 1

$3,000

Step-by-step explanation:

The property owner can claim a tax deduction on some or all of the taxes paid on that property, provided it is for personal use and the owner itemizes deductions on their federal tax return. Taxes paid on rental or commercial property—and on property not owned by the taxpayer—cannot be deducted.

The $4,500 sales tax and the $3,000 property tax are deducted from the AGI less state income taxes ($5,000).

$8,500-$5,000= $3,000