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| *Loan,banking and credit>>>income tax |
Do you have to claim tax refunds as income for the following year? |
Do you have to claim tax refunds as income for the following year? Not your federal tax refund. State income tax refund is taxable, but only if you itemized in the year that the refund is for, and the taxable amount can be reduced for 2 reasons. The first would be if you paid some of the state tax in the following year (i.e. you get a $500 state refund in 2007 for 2006 taxes, but you had paid $250 in 2007 for 2006 state estimates. Your taxable refund amount would only be $250). The second would be if the difference between your itemized deductions and your standard deduction is less than your state refund (i.e. you get a $500 state refund, but the difference between your itemized deductions and your standard deduction was only $250, your taxable refund would be $250). I have included an irs link on state tax refunds to further help you. Source(s): http://www.irs.gov/faqs/faq-kw182.html... No for federal returns. If you got a state tax refund and you claimed a federal deduction for the state tax you paid, you would need to declare that as income. ss Only on state (and local, if you have any) refunds if you itemized in the year the 1099-G was for. Then this amount may not be the full amount included in as income. The 1040 instructions will help you figure out it the full amount is taxable. This action is know as a recovery because you claimed a deduction that you actually received money from later. Also , you claim this income the next year. So if you got a state refund for your 2006 taxes and you itemized, you claim the refund on your 2007 federal taxes. Publication 17, IRS website http://www.irs.gov/faqs/faq-kw182.html... For your Federal return only the state income tax refund when you have itemized your deductions in the previous year and taken a deduction for state and local taxes paid. Not federal refunds - you never have to claim those. If you received a state or local refund, and you itemized the previous year and deducted the state or local taxes, then you have to claim them as income, since you had overstated your deductions the previous year. If you got a state or local refund but did not itemize the year before, then no, you don't claim them as income. |
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