 and the states that are more responsible with their money frankly uh would say that that seems quite fair to them i would think but state and local taxes subject to this limit are the taxes that you include on lines five a five b and five c so we have to keep that in consideration because again in certain states we can clear that pretty pretty easily right so in any case safe harbor for certain charitable contributions made in exchange for a state or local tax credit so if you made charitable contributions in exchange for a state or local tax credit and your charitable contribution deduction must be reduced as a result of receiving or expecting to receive the tax credit you may qualify for a safe harbor that allows you to treat some or all of the disallowed charitable contribution as a payment of state and local taxes so that's kind of a specialty area that might not come up too much but if you have more higher income uh tax planning situations that then you can take a look at that in more detail the safe harbor applies if you meet the following conditions one you made a cash contribution to an entity described in section 170c two in return for the cash contribution you received a state or local tax credit three you must reduce your charitable contribution amount by the amount of the state or local tax credit you receive if you meet these conditions and uh to the extent you apply the state or local tax credit to this or a prior year's state or local tax liability you may include this amount online five a five b five c whichever is appropriate uh to the extent you apply a portion of the credit to offset your state or local tax liability in a subsequent year as permitted by law you may treat this amount as state or local tax paid in the year the credit is applied all right so for more information on that one you could take a look at uh the safe harbor rules treasury reg 1.164-3 j so us territory taxes so include taxes imposed by a us territory with your state and local taxes online five a five b five c however don't include any us territory taxes you paid that are allocable to include uh to included income tip you may want to take a credit for us territory tax instead of a deduction so again these this is kind of a more specialty area so if you're working in tax preparation you might want to be thinking okay am i just doing taxes for people that work in a particular state do i want to do taxes possibly for people that have income that cross state borders which gets complicated in and of itself because different states have different types of taxes and you're going to possibly need more complex software at least to help you as well as understanding the differences in different states and then when you get to people that have territories or like foreign income then of course the rules become a little bit more complex there as well and so so again the question if you're doing tax preparation is what kind of clients do want do you want to specialize on how complex of a returns do you want to be doing and then stick to the plan uh and don't let people convince you to do more complex returns because they want an exception for this and that or the other things just do stick to your stick to your plan this is my plan dang it this is my this is my business so see the instructions for schedule three form 10 40 line one for details so line five a caution you can elect to deduct state and local general sales taxes instead of state and local income taxes you can't deduct both now how did this come up now remember if we're if we're allowed to deduct state taxes on the federal tax return then the question comes up well how does the state tax it used to be that they would only allow the income tax which of course caused some states to conform to an income tax system that could maximize the capacity for deduction like california and new york right so now they're going to say i'm going to try to maximize my capacity to have state and local tax deductions for people which basically means we're going to we're going to be subsidizing the state taxes and paying it by the federal government right whereas other states said hey look i'm i don't want to design my tax system based on what the federal government says because the states are sovereign and possibly they think that a different tax system but rather than an income tax system would work better such as like a sales tax system