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In 2016, I received an NJ Tax Refund of $2,294.00 and paid Tax to MD of $2,341.00 while an NJ resident working in NJ and MD. Would the NJ refund count as income on 2017?

Forum|Forum|7 years ago
June 3, 2019
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Turbo Tax is calculating the NJ refund as Federally Taxable income for 2017, however, the net of the tax refund from NJ and the tax paid to MD is a tax payment of $47. Should I remove the 2,294 from State and local Tax Funds on Form 1099-G under 1099-MISC and Other Common Income in the 2017 Income Summary or will the payment to MD for State Tax in 2016 be counted in the Deductions & Credits section offsetting the tax refund income?

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Best answer by IsabellaG

Yes, because the two taxes are treated separately, not netted against each other.

Your NJ refund will be taxable if you claimed your NJ withholding on your 2016 return, and received a tax benefit from that deduction.

On the other hand, the tax you paid MD in 2017 (for 2016) is a tax deduction for you in 2017. Make sure that you see this in your Schedule A. Your 2017 State Income Tax deduction should include all of your 2017 W-2 withholding, plus the amount you paid with your 2016 state tax return.

IsabellaGAnswer

Employee

Yes, because the two taxes are treated separately, not netted against each other.

Your NJ refund will be taxable if you claimed your NJ withholding on your 2016 return, and received a tax benefit from that deduction.

On the other hand, the tax you paid MD in 2017 (for 2016) is a tax deduction for you in 2017. Make sure that you see this in your Schedule A. Your 2017 State Income Tax deduction should include all of your 2017 W-2 withholding, plus the amount you paid with your 2016 state tax return.

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