Question

Taxability of State Tax refund not deducted

Forum|Forum|6 years ago
January 31, 2020
1 reply
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For 2018 taxes, I itemized and deducted 2017 state taxes paid in 2018, and state taxes withheld in 2018 for total of $6048. Also deducted $4330 in property tax, for total of $10,378, capped at $10,000. Because I had an unusual investment payout that year, I also filed estimated taxes on January 2019 in the amount of $3500 for my state taxes. This turned out to be too much, so I got a refund of $1606 in 2019, and now a 1099G reporting the income. Since NONE of the $3500 was claimed or used as part of the $6048 state tax deducted, I don't know any of this amount is taxable. Yet when I go through the steps in turbo tax, it is telling me $600 is taxable. Does anyone know how this can be? Seems like double taxation to me.

J

JulieS

If the $3500 was paid in January of 2019, that doesn't count as state income taxes paid during 2018, even if it was for 2018. I know that is what caused the state refund to be high, but because the amount was paid in 2019, it can only be deducted in 2019.

You can claim the $3500 as taxes paid in 2019, which will offset the taxable refund.

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