When to deduct state tax refunds that are forwarded to next years estimated state taxes on federal returns.

[rtaxc]

I did not file my 2019 state tax return until 2021 and had the state refund applied to the 2020 state estimated taxes.  Do I use this refund as a federal deduction on the 2020 federal tax or 2021 federal tax?

[SweetieJean]

Are you sure your state will even let you do that, since it didn't take place until 2021?

[xmasbaby0]

Your description of the way you did things is confusing.   First of all, a state refund is not a "deduction" on any tax return.     When you receive a state refund it is entered as INCOME for the federal tax return for the tax year in which you received the refund IF you itemized deductions for the earlier tax year.   Otherwise you do not even enter the state refund on your federal return.

Since you say you did not file your 2019 state return until 2021 it would have been impossible for you to receive that 2019 state refund before 2021.   And....we do not know if you even filed your 2020 or 2021 tax returns since you have not mentioned if you filed them.

Explain more clearly what you did with those tax returns.

[rtaxc]

Using TT for the 2019 state return I had a refund due and I chose to apply all of that 2019 refund to my estimated 2020 state taxes (this 2019 state return was not filed with state until 2021).  You are allowed to use state taxes paid (up to $10,000) on schd A as a deduction.  My question is: Should that 2019 state tax refund applied to the 2020 state estimated tax be used for a federal schd A deduction on the federal 2020 return or the 2021 federal return (because the 2019 state return was not filed until 2021)?  I have not filed either of the federal or state returns for 2020 or 2021.

[xmasbaby0]

State tax PAID is not the same as a tax REFUND.   They mean the opposite.  You do not enter a state refund received as a deduction on Schedule A.

What you want to do is odd---you want to apply a 2019 state refund you may or may not have even received yet to a 2020 state tax return you are filing late----do you even know yet if you will owe tax to the state when you prepare the 2020 state return?   Or will you get a 2020 state refund?   

[VolvoGirl]

But a state refund that is applied to the next year's estimated taxes can be a federal schedule A deduction.  But because you are trying to apply it to a 2020 return now we are not sure which year the estimated payment will go for or which year you would get a deduction for it.  

And if you itemized deductions on your 2019 return then the state refund might be taxable on the federal return the year you actually received it. 

[rtaxc]

The 2019 state refund was applied to 2020 estimated state taxes on the 2019 return which was not filed until 2021.  I understand that there will be both a federal income from the state refund but there should also be a federal sched A deduction from the application of the refund towards the 2020 state estimated taxes.  I will have state taxes to pay on my 2020 return....so is the sched A deduction put on the 2020 or 2021 federal tax return?