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I closed a business approx. 3 years ago. As a result I was…

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I closed a business approx...
I closed a business approx. 3 years ago. As a result I was forced to file chapter 7 bankruptcy. N Y state sales tax however must be paid back. I owed approx. 15,000 and with penalty and and interest around 28,000. I have been paying back on a weekly basis 10 % of my salary for 2 years. For tax year 2014 that amounted to 1500.00 dollars, this past year it was 2,700.00 dollars. My question is can this be deducted on my personal tax return as this is a personal tax liability.
Submitted: 2 years ago.Category: Tax
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Answered in 8 minutes by:
1/19/2016
Tax Professional: Robin D., Senior Tax Advisor 4 replied 2 years ago
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 18,390
Experience: 15years with H & R Block. Divisional leader, Instructor
Verified

Hello

Unfortunately no. The sales tax is a trust fund obligation and not deductible.

The sales tax obligation is not an income tax. The general sales tax paid and deducted on Schedule A of your personal return would be only for general sales tax you paid in the tax year and not for any business purpose.

Had this been for personal state income taxes you would have been allowed to deduct just the tax portion but not the interest as that was a penalty and not deductible.

After you view my response, please post below if you need more information or if you need no further clarification a positive rating is appreciated.
I know rating takes an additional step and I truly appreciate it when you take the extra time!

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