Can I Deduct State Tax Payments Made From Prior Years in My Taxes?

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If you missed the write-off for state taxes on last year's federal return, it's not too late to deduct them. The Internal Revenue Service says you can amend a past return up to three years after the date you filed the return or up to two years after you paid the tax, whichever date is later. You amend returns by filing IRS Form 1040X. You can do this to add an itemized deduction, or to switch from the standard deduction to itemized deductions.

Amending and Itemizing

At the top of the 1040X, mark off whichever calendar year you're amending. If you've missed the deduction for more than one year, submit a separate 1040X for each year you want to amend. On line 2, column A, list the original total for your itemized or standard deduction. In column B, show how much writing off state taxes will increase your deduction. Add the two together to get your amended total and write that in column C.

Completing the Form

The IRS won't simply accept your amendment without explanation. Use Part III of the amended return to explain why you're filing it. Attach Schedule A with the added state tax deduction as evidence. If changing Schedule A is the only change you're making, you can skip some of the other lines. For example, if you're not adjusting the number of exemptions or claiming extra tax credits, you can leave the relevant lines blank.

Measure the Effect

On line 5, report the original taxable income from your 1040, the amount it changed because of your new deduction, and the new amount. Calculate your new tax liability for the year -- presumably less than you originally paid -- on line 6. Further down the form, report your original payment for the year, then calculate how much of that was an overpayment. You can have the excess refunded, or use it against next year's estimated taxes.

Getting Your Money

After you send in your return, the IRS will go over your math and confirm it was correct. If you want to know how the work is progressing, give the IRS three weeks before asking about the 1040X. You can look up your return online with your taxpayer ID -- usually your Social Security number -- your date of birth and your ZIP code. It can take up to 16 weeks to process a 1040X.