cancel
Showing results for 
Search instead for 
Did you mean: 
Level 2

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

Filing late state and federal returns for 2013, 2014 and 2015.  For each year, I will be due refunds which will be applied as estimated taxes for period 1 of the following year. 

Am I correct in thinking the refunds, though applied to the following year, are not reportable as income until I receive the associated 1099-Gs in January 2017 (reportable TY2016)?  After all, that would be the case if I chose to receive cash back, rather than applying it to the following year's payments.  They are being applied to the following year to reduce interest on the underpayment of estimated taxes.

Seems like TurboTax is reporting the refunds as taxable the following year, as they likely would have been had I filed on time - do I need to override and enter zero as the state tax refunds until I receive the 1099Gs in Jan 2017?

1 Best answer

Accepted Solutions
Level 20

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

Yes, all the refunds received in 2016 are taxed in 2016 even if they are applied to the next tax year. 

What you have to do is adjust or remove the automatic transferring of the prior year state refund since you are completing several at the same time. 

6 Replies
Level 20

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

Yes, all the refunds received in 2016 are taxed in 2016 even if they are applied to the next tax year. 

What you have to do is adjust or remove the automatic transferring of the prior year state refund since you are completing several at the same time. 

Level 1

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

The refund amount appears on multiple worksheets/forms so I tried to make the change in the Interview questions, but it doesnt appear possible.  For example purposes, refund due from 2013 is 1500, and amount applied to 2014 is 1400.  The 2014 return line 10 shows taxable refund of 700 (  the portion of the refund that is allocable to 2013 estimated payment made after 12/31/13.

Since the refund isnt taxable until the cash/1099-G, line 10 should be zero for 2014 as the 2013 refund wont be reportable until TY2016.  In the Interview, if I answer the question, "Did you receive a state tax refund last year?" - if I answer NO (meaning a refund was due and applied to 2014, but no 1099-G or cash received, line 10 continues to show the taxable refund of 700.  If I answer YES, I change the amount received to zero (no 1099-G/cash collected), and leave the amount applied as 1400, Turbotax says the applied amount cant exceed the amount of the refund, and I cant progress any further.  If I enter any amount greater than zero as received, it seems likely Turbotax will determine that some portion of it is allocable to 2014, just as it did previously.

We were in agreement that line 10 for 2014 should be 0, even though a portion of the 2013 refund due was applied to 2014 (the entire 2013 refund would be reported in 2016 when the 1099-G is issued.

Is a direct entry into the Forms the only way to handle this?  If so, which of the forms do I make the change to?  As far as I can tell, the state tax refund appears on line 10 of 1040, and in the Tax Payments Worksheet, Federal Carryover Worksheet, State and Local Income tax Refund Worksheet and the State and Local Tax Deduction Worksheet for Sched A.

Thanks very much for your help!
Level 19

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

This is futile. Applying your 2013 refund to 2014 will not help you. you have not paid and will still have accrued interest up to the middle of the year 2016.
Highlighted
Level 19

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

put another way your # 1 estimated tax payment for 2014 is two years too late.
Level 3

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

This doesn't answer the question.  Turbotax incorrectly assumes you got your previous years state refund in the year you are working on when it could be received in a later year in the case of doing old taxes.  The program doesnt handle this correctly and I need to know what to edit to prevent the program from adding the refund to the current years line 10 income.  It instead needs to be added to the line 10 of the year it was received by the state.  Please help!
Level 20

Filing multiple (late) returns and applying refunds due as estimated taxes for the following year. The refunds are reported as income when the 1099-Gs are received?

To change the refund received during the year go to the 1099-G input section ...

https://ttlc.intuit.com/replies/5294535