I applied my 2020 state refund to my 2021 estimated taxes. Is this amount taxable as income in 2021?

Forum|Forum|4 years ago
March 7, 2022
1 reply
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I applied my 2020 state refund to my 2021 estimated taxes. Is this taxable as income in 2021 since I didn't actually take a refund?

Best answer by bluedeb

Yes, it can be, even though you put your refund to your 2021 taxes, it is still considered that you still received the refund.

It depends whether you itemized deductions on your federal income tax return last year. If you did not itemize deductions on your federal tax return last year, do not report any of the refund as income.

However, if you itemized deductions last year and then received a refund of state or local taxes, you may have to include all or part of the refund as income on your return this year. In general, state and local income tax refunds are taxable if the refunded tax was deducted in a prior year and you received a tax benefit from the deduction. Refunds are partially taxable if your itemized deductions last year exceeded your standard deduction by less than the amount of the refund.

Complete the state and local income tax refund worksheet found in the instruction booklet to your Form 1040 to determine how much (if any) of your state or local income tax refund is taxable this year.

bluedeb

Answer

Alumni - Champ

Yes, it can be, even though you put your refund to your 2021 taxes, it is still considered that you still received the refund.

It depends whether you itemized deductions on your federal income tax return last year. If you did not itemize deductions on your federal tax return last year, do not report any of the refund as income.

However, if you itemized deductions last year and then received a refund of state or local taxes, you may have to include all or part of the refund as income on your return this year. In general, state and local income tax refunds are taxable if the refunded tax was deducted in a prior year and you received a tax benefit from the deduction. Refunds are partially taxable if your itemized deductions last year exceeded your standard deduction by less than the amount of the refund.

Complete the state and local income tax refund worksheet found in the instruction booklet to your Form 1040 to determine how much (if any) of your state or local income tax refund is taxable this year.