Are payments of federal back taxes deductible in the year the payments are made?

Jul 25, 2019

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We were notified by the IRS a couple of years ago that we owed more taxes for the 2014 tax year. With interest and penalties, the amount we owe now is up to about $8,800. Since we don't have the money to pay this amount, we were hoping to send in an offer-in-compromise. But before we do that, we need to know if we do make any payments for the back-due taxes, is that amount deductible in the year taxes are paid? Example: If we paid $5,000 to the IRS this year for the old taxes, do we count that as taxes paid this year, 2019? Whenever you do your taxes, they ask you how much in taxes have you already paid so far in the year. 

Payment of federal tax is not deductible on your federal return. The deduction is only for state, local, and property tax. 

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: David A. Caplan, CPA, is a sole practitioner in Lafayette Hill, Pa.

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