In: Finance
Margo has $2,200 withheld from her wages for state income taxes during 2019. In March of 2019, she paid $400 in additional taxes for her 2018 state tax return. Her state income tax liability for 2019 is $2,700 and she pays the additional $500 when she files her 2019 state tax return in April of 2020. What amount should Margo deduct as an itemized deduction for state income taxes on her 2019 federal income tax return, assuming she deducts state and local income taxes?
As per income tax(used cash basis method), as $400 was paid in March 2019, that's why $400 was included with 2019 Withholdings of $2,500.
Itemized deduction = 2019 Withholdings + Tax paid in March 2019
= $2,500 + $400 = $2,900
Itemized Deduction = $2,900