A taxpayer makes his final estimated tax payment for 2008 in January 2009. Where does he report this payment?

The correct reporting of a taxpayer’s final estimated tax payment for the year 2008, which is made in January 2009, is an important detail in understanding how tax payments are recorded. This payment should be reported on the 2009 Schedule A, line 5. This line on Schedule A is designated for reporting deductible state and local taxes, which includes any estimated tax payments made for the previous year.

When a taxpayer makes their final estimated tax payment for a given year in the following calendar year, they are allowed to deduct this payment when filing their return for the year in which the payment was made. In this case, since the payment is made in January 2009, it will be included as a deductible item on the 2009 tax return.

This treatment stems from the cash-basis method of accounting used by most individual taxpayers, where expenses are deducted in the year they are paid, rather than the year they are incurred. Hence, while the estimated payment was primarily for the 2008 tax year, the timing of the payment necessitates it be recorded on the 2009 return.

In contrast, reporting it only on the 2008 federal return would not align with the cash-basis accounting principles. Similarly, reporting