Past returns filed this year

Forum|Forum|3 years ago
February 16, 2023
3 replies
30 views

I filed four years (2018-2021) of federal and California state returns in 2022 for my sister. She had a few refunds and had to pay taxes, penalties, and interest for a few of the years. Do I report either the refunds or overdue taxes paid on her 2022 return?

TurboTax Basic Windows

ErnieS0

Level 15

It depends. The IRS operates on calendar years.

Report any prior year tax refunds received — or payments made — in 2022 on your sister’s 2022 return. Anything received in 2023 will go on next year’s return.

If IRS or the California Franchise Tax Board paid interest on those refunds, you’ll have to include those amounts as interest income. You should get a 1099-INT.

State tax payments are deductible. Federal payments are not, nor are state and federal penalties and interest for unpaid tax.

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quiltingfool13Author

Level 2

I entered the state taxes paid into the federal return. I had the federal and state returns checked again. The prior years taxes paid did not make a difference in taxes due for this year. Is this because she is filing with standard deduction? Thanks for your help,.

Opus 17

Level 15

@quiltingfool13 wrote:

I entered the state taxes paid into the federal return. I had the federal and state returns checked again. The prior years taxes paid did not make a difference in taxes due for this year. Is this because she is filing with standard deduction? Thanks for your help,.

If the taxpayer paid additional state income tax in 2022 (for any past year) that is an itemized deduction on schedule A. The limit on deducting all state and local taxes (including income and property taxes) is $10,000. If the taxpayer is using the standard deduction, then listing state income taxes paid won't reduce their tax.

If the taxpayer received any state tax refund in 2022 (for any past year) the refund is not taxable if the taxpayer used the standard deduction for that prior year. For example, if the taxpayer got a refund from their 2019 tax return, the refund is not taxable if they used the standard deduction in 2019. If the taxpayer itemized their deductions for that prior year on their federal return and deducted state income taxes paid, then a refund might be taxable now. Since you said she used the standard deduction, I'm not going to take the time to explain how to calculate if a refund is taxable when some itemized, but I can explain it later if you need to know.