Quote:
Originally Posted by NCvols
From the total $220 refunds and interest received in 2013 from tax year 2010, what amounts need to be included in our 2013 income and where should this be included on Form 1040?
Sincerely appreciate your help! |
So, You filed your 2010 amended VA/SC returns for refunds. I guess you lso need to file your 2010 amended NC return to claim your state taxes paid to both VA and SC on your NC return..So, it depends; your tax refund from your state government may be taxable. However, if you claimed the standard deduction on your 2010 federal tax return, your state tax refunds are not taxable. You can skip line 10 on 1040. If you itemized your deductions on Sch A of 1040 on your 2010 federal tax return and you claimed a deduction for State Taxes paid to NC/SC And VA, then , you need to compare your total itemized deductions to the standard deduction you could have taken on your 2012 fed return. Using a calculator, enter the amount of your itemized deductions, and subtract the standard deduction you could have taken instead. The result is the taxable portion of your state tax refunds.You also need to report th einteret income on your refunds on 1040 line 8a
Note; The IRS allows taxpayers to claim a deduction for state and local income taxes in the year they are paid by completing Sch A of Form 1040. The value of all state and local income taxes paid is then added to all other itemized deductions and the aggregate value is used to reduce the amount of the taxpayer's taxable income and, thus, income tax. When a taxpayer has claimed a federal itemized deduction for state or local income tax payments and subsequently receives a refund related to those payments, the IRS requires the taxpayer to report the refund as income on Form 1040 line 10 for the year in which the refund was received. As a result, only taxpayers who have filed federal itemized deductions for the year for which the state or local government issued a tax refund must claim the refund as incomeas said above, to avoid the need to report any subsequent state or local income tax refunds as income, many taxpayers who itemize deductions will choose to claim a deduction for state and local sales tax instead of deducting state and local income taxes. Taxpayers may choose to deduct either state and local sales tax or income tax, but not both. Taxpayers who deduct state and local sales tax in lieu of income tax are not required to report any subsequent state and local income tax refunds as income.