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How do I apply a repayment of a state refund so that its removed from my overall income?

Forum|Forum|7 years ago
June 1, 2019
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SC contacted me after I submitted my taxes last year and said that I overpaid by $7000. I was surprised but sent them the documentation they requested and they sent me a check. 5 months later they sent me a letter requesting the $7000 back and I sent a check. They then reported my refund for 2017 to the IRS as 7k more than it really was because, "they have to report all money they sent". Where do I show the 7k repayment so that it is not counted in my overall income?

TurboTax Deluxe Online

Best answer by KrisD15

You would need to add the state tax you paid back.

Sign into your account and return. Click "Pick up where I left off"

Click Federal on the left

Click Deductions & Credits on the top

(you may need to click "See all tax breaks")

Scroll down to Estimates and Other Taxes Paid and Click Show more

Scroll down to Income Taxes Paid and Click Start or Revisit

Answer Yes

Scroll down to Balance due on your 2017 state taxes paid in 2018 and add the $7,000 there.

Your's is a unique situation, although I have seen similar things happen with the states. The issue is that the state tax deductible on the Federal return is limited, so if you itemize, you may be taxed on the state's error.

KrisD15Answer