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Laura had $3,000 of state income taxes withheld from her salary in 2019. Laura properly claimed...

Laura had $3,000 of state income taxes withheld from her salary in 2019. Laura properly claimed the standard deduction on her Form 1040 for 2019. Her 2019 state tax return (filed on April 15, 2020) showed an $1,000 refund, which she received on May 25, 2020. How much of the state tax refund should be included in income on her 2020 federal return?

$400 $0 $100 $200 $600

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Answer #1

Ans: The correct option for the answer is option B i.e. $0

As Laura had claimed standard deduction on her form 1040 for 2019 therefore the tax refund which she received on May 25,2020 for $1000 should not be included in income for 2020 federal tax return

If a taxpayer took a deduction for state and local income taxes then refund is only taxable .

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