Will it make a net tax difference if I apply my state refund to next year's tax instead of taking a state refund particularly given the change in federal tax laws?

I'm expecting a particularly large state tax refund this year because of large end-of-year charitable contributions. I will itemize deductions this year, but do not expect to itemize next year with the change in the standard deduction. If I take the state tax refund, I know that comes back as income in next year's taxes, so it seems to make sense to not take that refund and change my state payroll deductions instead. However, I know there are some provisions about prepayment of state taxes in the new federal tax law.

704

1 Best answer

Level 15

Jun 4, 2019 4:02:42 PM

It makes no difference. so you should take the refund.
and your payroll deductions are a separate thing.
The IRS is still working on the effect of the new law on payroll deductions.

Level 15

Jun 4, 2019 4:02:42 PM

It makes no difference. so you should take the refund.
and your payroll deductions are a separate thing.
The IRS is still working on the effect of the new law on payroll deductions.

Level 15

Jun 4, 2019 4:02:43 PM

It's not a good idea to change your payroll deduction based on your choice to "apply to next year". If you can't afford it, don't do it. besides, your tax due will go up.

Level 13

Jun 4, 2019 4:02:46 PM

"so it seems to make sense to not take that refund"

You can't "not take" the state refund. Applying it to next year's taxes is doesn't mean you didn't "take" the refund; you in effect took the refund and then sent it back to the state as estimated taxes. I can't see that there's anything in the new federal law that affects that.

Tom Young

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Will it make a net tax difference if I apply my state refund to next year's tax instead of taking a state refund particularly given the change in federal tax laws?