Because your state income tax deduction is not determined until you file your federal tax return first, using the state withholding is a way for the IRS to have an amount already reported by employers on the current year W2 filing instead of having to go back and check the state returns the following year. This is also why if you itemize and deduct state income tax, if you get a refund, you will get a 1099-G the following year which is added back as income to correct the deduction amount.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
