I received a letter from my state's department of revenue saying I owed them an extra $200 because of an error in an old tax return. They also tacked on about another 10% interest for the nearly 2 years between the filing date and the date of the letter. I paid it immediately, but now I'm wondering how I need to account for this in the rest of my tax reporting.
On the US federal form 1040, there are instructions for entering state taxes paid for the previous tax year, but since the instructions mention a specific tax year, it seems I'm not supposed to enter state taxes or adjustments paid during the previous tax year.
This leaves me with a two-part question:
Part 1: If I want to reclaim part of the adjusted state taxes on my federal return, does this mean I need to amend all my federal returns going back to the year for which I had to pay additional state taxes, or is there some easier solution?
Part 2: Is it even worth the effort to try to reclaim some fraction of the adjusted state taxes on a later return? (i.e., will I even be able to reclaim anything on my federal taxes anyway if I'm taking the standard deductions?)