Question

Problem 10-30 (Algorithmic) (LO. 4) Norma, who is single and uses the cash method of accounting, lives in a state that imposes an income tax. In April 2019, she files her state income tax return for 2018 and pays an additional $940 in state income taxes. During 2019, her withholdings for state income tax purposes amount to $3,290, and she pays estimated state income tax of $658. In April 2020, she files her state income tax return for 2019, claiming a refund of $1,692. Norma receives the refund in August 2020. Norma has no other state or local tax expenses. If an amount is zero, enter "o". a. Assuming that Norma itemized deductions in 2019, how much may she claim as a deduction for state income taxes on her Federal return for calendar year 2019 (filed April 2020)? $ 9,100 X b. Assuming that Norma itemized deductions in 2019 (which totaled $27,700), how will the refund of $1,692 that she received in 2020 be treated for Federal income tax purposes? Norma will include $ 1,800 X as income in 2020. C. Assume that Norma itemized deductions in 2019 (which totaled $20,000) and that she elects to have the $1,692 refund applied toward her 2020 state income tax liability. How will the $1,692 be treated for Federal income tax purposes? Norma will include $ 1,800 X as income in 2020. d. Assuming that Norma did not itemize deductions in 2019, how will the refund of $1,692 received in 2020 be treated for Federal income tax purposes? Norma will include $ 1,800 X as income in 2020.

Answer 1

rA $940 paid in 2018 for 2018 t $3290 with held for 2019 & $658 estimated tea payment $ 4888 Nooma will include $1692 in 2020 ge oss income to an extent the texpayer deriveda tax benefit from itemizing in 2016. (0) Norma will include $1692 as income in 2020. (D In 2020, is itemised deductions were not done she is not required to report any of the $ 1892 refund as an income in 2020 Hence Norma will includ $0 Oddy