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aimtobeacpa
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Joined: 10 Dec 2009
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Posted: 30 Apr 2011 at 10:46 \| IP Logged

in wiley pg 387

under tax benefit rule...under (2)...the second eg
ind Y,had total itemized ded of 5800....

can someone explain why 5800-5700??

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puckhead23
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Joined: 21 Nov 2010
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Posted: 30 Apr 2011 at 13:21 \| IP Logged

A taxpayer does not have to add back state refunds if he/she does not itemize (ie. takes the standard deduction). In the example, the taxpayer (T) can itemize only $5,800. If T is forced to claim $400 state refund, T gets screwed by only getting an equivalent of $5,400 deduction (standard deduction is $5,700). By only claiming $100 of the state tax refund, the taxpayer isn't being treated worse than the minimum (standard) deduction.

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aimtobeacpa
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Posted: 01 May 2011 at 12:07 \| IP Logged

i still did not understand y 100 is income?

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BEC-74,82(lost credit),78
FAR-67,80
AUD-75
REG-68,72,79

aimtobeacpa
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Joined: 10 Dec 2009
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Posted: 03 May 2011 at 16:06 \| IP Logged

can someone explain why the full refund of 400 is not income?

ind y,a single taxpayer,had total itemized deductions of 5800 for 2009 including 800 of state income taxes.in 2010,refund of 400 of 2009 state inc taxes is received.y must include 5800-5700=100 of refund in income for 2010.

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BEC-74,82(lost credit),78
FAR-67,80
AUD-75
REG-68,72,79

thechamp26
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Joined: 11 Aug 2010
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Posts: 52

Posted: 03 May 2011 at 21:53 \| IP Logged

You only include $100 of the $400 refund in income for the
2010 tax year because that is the amount that is over the
standard deduction if you would have chosen it in 2009.
You are allowed a $5,700 standard deduction as a minimum
deduction, therefore, if you included your full $400 refund
as income in the following tax year, you wouldn't have
gotten the benefit of the minimum standard deduction.

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