@MelO4 wrote:
I thought the State Tax deduction rule was: if you deduct the State Tax this year (get a benefit) but then get a refund of it next year, then you are taxed on the State Refund (paying back the benefit).
I'm getting confused because it's an Estimated Payment and I'm hoping I get most of it back next year.
There's no way to get a federal tax benefit for state income tax that you don't actually pay. If you pay it this year and get it refunded next year, it's the same as if you never paid it in the first place. There's no federal tax benefit either way.
If you deduct it this year you get a federal tax benefit this year. If it's refunded next year, you pay back the benefit that you got, so you have no net federal tax benefit. If you don't deduct it this year you don't get any federal tax benefit this year or next year, so you have no net federal tax benefit. You end up the same in either case.
Why do you want to apply your state refund to next year if you expect to get most of it back next year? You're just lending the state your money for a year, and not earning any interest on it. You should just take the state refund this year.
