Question

Pierre, a cash basis, unmarried taxpayer, had $4,670 of state income tax withheld during 2019. Also in 2019, Pierre paid $1,168 that was due when he filed his 2018 state income tax return and made estimated payments of $3,269 towards his 2019 state income tax liability. When Pierre files his 2019 Federal income tax return in April 2020, he elects to itemize deductions, which amount to $15,650, including the state income tax payments and withholdings, all of which reduce his taxable income. As a result of overpaying his 2019 state income tax, Pierre receives a refund of $1,868 in 2020. The standard deduction for single taxpayers for 2019 was $12,200. a. What is Pierre's 2019 state income tax deduction? b. How much of the $1,868 will Pierre include in his 2020 gross income? $

Answer 1

Income tax deduction = Tax withheld + Amount already paid + Estimated payments made = $4670+$1168+$3269 = $9107 Pierre's 2019 state income tax deduction for is $9107. b) Pierre has elected to itemize his deductions. So the entire amount $1868 received as refund will be included in his 2020 gross income.