Income Taxes This section discusses federal, state, local, and foreign incometaxes. Federal income taxes.You cannot deduct federal income taxes. State and local income taxes.A corporation or partnership can deduct state income taxes imposedon the corporation or partnership as business expenses. An individualcan deduct state income taxes only as an itemized deduction onSchedule A (Form 1040). Hoteles mas baratos MakatiHowever, an individual can deduct a state tax on gross income (asdistinguished from net income) directly attributable to a trade orbusiness as a business expense. Accrual of contested income taxes.If you use an accrual method, can deduct taxes before you pay them,and contest a state or local income tax liability, a special ruleapplies. Under this special rule, you must accrue and deduct anycontested amount in the tax year in which the liability is finallydetermined. Filing a tax return is not considered contesting a liability. Ifyou do not make an objective act of protest or show some affirmativeevidence of denial of the liability, you can deduct any additionalstate or local income taxes found to be due for a prior year in theyear for which they were originally imposed. You cannot deduct them inthe year in which the liability is finally determined. discount hotels in Aix en ProvenceForeign income taxes.Generally, you can take either a deduction or a credit for incometaxes imposed on you by a foreign country or a U.S. possession.However, an individual cannot take a deduction or credit for foreignincome taxes paid on income that is exempt from U.S. tax under theforeign earned income exclusion or the foreign housing exclusion. Forinformation on these exclusions, see Publication 54,Tax Guidefor U.S. Citizens and Resident Aliens Abroad.