An unmarried taxpayer itemized deductions of $6,650 in 2013, which included $3,700 of state income tax withheld. In 2014, the taxpayer received an $800 state tax refund. According to the tax benefit rule, the taxpayer must include $550 of the refund in gross income for 2014, as the taxpayer received a $550 tax benefit in 2013 from itemizing deductions over the standard deduction amount.
An unmarried taxpayer itemized deductions in 2013. The taxpayers i.pdf
1. An unmarried taxpayer itemized deductions in 2013. The taxpayer's itemized deductions were
$6,650; the standard deduction amount was $6,100. Included in the taxpayer's itemized
deductions were $3,700 of state income tax withheld. In 2014, the taxpayer receives an $800
refund check from the state government. What amount must the taxpayer include in gross
income in 2014?
Solution
Answer : $ 550
According to the tax benefit rule, received a $550 tax benefit.
$6,650 itemized deductions less $6100 standard deduction.
the refund is not taxable
