Question

Þ8. During the following years Adolpho T. (single) had (1) withheld, (2) paid (by check - presumably estimated tax payments or paid with the extension) and (3) received a refund of the following amounts for state income tax purposes: Withheld 2019 $2,500 $1,200 $800 2020 $3,000 $1,400 $1,600 Paid by check Refund The refunds were all of amounts “paid” (withheld and paid by check) in the prior year. Adolpho's total itemized deductions in 2019 were $14,400. What is Adolpho's state income tax deduction for each year, and his income from the refund in 2020? What would his income from the 2020 refund be if the refund was $2,400, rather than $1,600?

Answer 1

i) Adolpho State income tax deduction for each year = Withheld amount in 2019 + Paid amount by check in 2019 - Refunded amount in 2020

= $2,500 + $1,200 - $1,600

= $2100

His Income from refund in 2020 = withheld amound in 2020 + refunded amount in 2019 + refunded amount in 2020

= 3000 + 800 + 1600

= $5400

ii) If the refund in 2020 would have been $2400 rather than $1600 then,

His Income from refund in 2020 = withheld amound in 2020 + refunded amount in 2019 + refunded amount in 2020

= 3000 + 800 + 2400

= $6200