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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16580
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Im in North Carolina and expecting a large capital gain for

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I'm in North Carolina and expecting a large capital gain for 2012. Would it be beneficial for me to pay state tax on the gain before 1/1/13 so I may deduct from my Federal return? Thanks.
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question, and thanks for using JustAnswer.com. As you are a cash basis taxpayer, if you pay your estimated capital gains tax before the end of the year you could deduct that amount on your federal return. CLICK HERE for more details on this deduction.

The state tax deduction is not going away with the fiscal cliff, and with the increase in tax rates expected to take place, it would actually make better sense to move the payment for those taxes into 2013 so that you can deduct them in 2013 when your income tax is going to be higher. This could save you more money.



You can CLICK HERE to read an article on CBS news about tax planning for the fiscal cliff.



This, of course, is my opinion. I think that taxes will be higher next year, and that you will benefit from paying the deduction in 2013 if all else is equal with your income. However, if you have significantly higher income in 2012 than you will in 2013 then pay the estimated payment now to lower your taxable income. Please let me know if this is unclear.



Please let me know if you need anything else. Thanks for using JustAnswer.com and have a happy, and safe, holiday season.



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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made. You should be aware that another expert might answer the same question making different assumptions ... that does not make THEIR answer correct. I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C and other Tax Specialists are ready to help you
Thank you for the positive rating. Please remember me the next time you have a question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer