The instructions for IRS Schedule A are not clear. On one hand it says the amount of state taxes I paid can be found on my 2016 W2, but on the other it seems to say to deduct taxes "paid in 2016" which were incurred in 2015.
So, do I deduct the taxes I PAID in 2016 which I incurred in 2015, or do I deduct the taxes I will be paying in 2017 which were incurred in 2016?
A close reading of the instructions suggests that what I am supposed to deduct is (A) the amount WITHHELD during 2016 PLUS (B) any cash paid in 2015 (but NOT withheld in 2015). In other words, what the instructions appear to be saying is...
Lets say I had $5000 withheld in 2015 and ended up owing $5250, so I paid $250 in 2016, then I had $6000 withheld in 2016. Then my total deduction would be the $6000 withheld in in 2016 PLUS the $250 paid for 2015 taxes, for a total of $6250 on my 2016 Schedule A. Is that right?
Same question for real estate taxes.