11. 12. 13. 14. 15. State and local property taxes are allowable as an itemized deduction only to the extent that the total tax paid exceeds 2% of the taxpayer's adjusted gross income. A cash basis taxpayer who mails a check in payment of an expense to a creditor on December 29, 2021 may deduct the item on his/her 2021 Form 1040, even if the check is not delivered to the creditor until January, 2022. An individual may claim an itemized deduction for both state/local income tax and state/local sales tax as long as the total of the two does not exceed $10,000. Points paid to refinance an existing loan secured by a taxpayer's principal residence must be capitalized and amortized over the life of the new loan. An expense is "necessary" if it is appropriate, helpful, or capable of making a contribution to the taxpayer's profit seeking activity.