ARIZONA - HELP PLEASE - Paid for physical therapy sessions in 2024 and was reimbursed in 2025

[Wedding5500]

Hello,

2024:  I paid for some physical therapy sessions and included them on my 2024 taxes.  I didn't itemize my Federal return.  By entering the medical expenses on my 1040, they flow through to my AZ 140 return, where I am allowed to itemize (even w/out doing it on the 1040), and I can deduct medical expenses without the percentage limit like on the Federal return.

2025:  The physical therapy company credited my credit card $168 (I think they over-charged me per visit).

Question:  Since I included it as a medical expense in 2024 where it lowered my taxable income, where in TT do I now include this $168 reimbursement  as income for 2025?

I didn't receive anything from the company, the credit just showed up on a credit card statement in 2025.

Thank you for any assistance you can provide.

[BillM223 · Accepted solution]

In the Arizona interview, after the section that asks about all sorts of adjustments to income, you will see a screen with the title "Other Adjustments". 

Other adjustments may be necessary. For example, you must add-back related to income that Arizona does not tax..." 

Here add your $168 add-back for the reimbursement. Note that this will be reported only on your state return, not on the federal.

See AZ instructions for 140 page 14:

D. Items Previously Deducted for Arizona Purposes Arizona statutes prohibit a taxpayer from deducting items more than once. If your Arizona taxable income includes items previously deducted for Arizona purposes, you must add such amounts to your Arizona gross income.

[Wedding5500]

@BillM223,

Can't thank you enough for this info - I absolutely could not figure out how to do this addition back onto only my AZ income and completely bypass my 1040 return.

Thank you!