Thanks so much for the quick response! So if I understand correctly, I would calculate as follows:
- Let's say I received a state refund amount of $18,000 for tax year 2022.
- In 2022, I itemized deductions, with a Schedule A, line 5a of $17,000, Schedule A, line 5d of $20,000, and Schedule A, line 17 of $17,000.
- I refigured my tax for 2022 by including the $18,000 refund amount, which reduced 2022 Schedule A, line 5a to -$1,000 and Schedule A, line 17 to below the standard deduction amount.
- Since the refiguring of Schedule A resulted in a lower itemized deduction amount than the standard deduction, I used the 2022 standard deduction ($12,950) to refigure my total tax.
- This resulted in an increase of the total tax (1040 line 24) of $2,000.
So would I include in my 2023 income the difference between the original total tax and the refigured total tax ($2,000) (1040 line 24), or the difference between the original itemized deduction and the refigured standard deduction ($4,050), or something else?
