crowd79 wrote:I received a surprise postcard in my mailbox from the state showing I received a refund last year of $xxx.xx & claiming that it may be taxable to the IRS as income if I itemized last year. However I did not itemize, so do I not have to report this at all?
Default User BR wrote:crowd79 wrote:I received a surprise postcard in my mailbox from the state showing I received a refund last year of $xxx.xx & claiming that it may be taxable to the IRS as income if I itemized last year. However I did not itemize, so do I not have to report this at all?
If you itemize your deductions, then state and local income taxes are deductible. You could either deduct the amount owed (which can be difficult if your relies on information from your federal return), or the amount withheld. If the latter, and you ended up getting a refund, then you had too much of a deduction. To make up for that, you have to add it to your taxable income the next year.
As you didn't itemize, then it doesn't matter to you.
If you elect to deduct state and local income taxes, you must check box a line 5. Include on this line the state and local income taxes listed below.
State and local income taxes withheld from your salary during 2012. Your Form(s) W-2 will show these amounts. Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld.
State and local income taxes paid in 2012 for a prior year, such as taxes paid with your 2011 state or local income tax return. Do not include penalties or interest.
State and local estimated tax payments made during 2012, including any part of a prior year refund that you chose to have credited to your 2012 state or local income taxes.
Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.
Mandatory contributions to the Alaska, California, New Jersey, or Pennsylvania state unemployment fund.
Mandatory contributions to state family leave programs, such as the New Jersey Family Leave Insurance (FLI) program and the California Paid Family Leave program.
Do not reduce your deduction by any: State or local income tax refund or
credit you expect to receive for 2012, or Refund of, or credit for, prior year state and local income taxes you actually received in 2012. Instead, see the instructions for Form 1040, line 10.