Taxable state refund xx,xxx.00..why what is that?

 

If I answer this one I either have to hire you or shoot you.  Can’t afford you.  LOL

 

when you get a refund even if it is applied to next year’s es like we generally do it is income.  This is because we deducted the refund as taxes paid on the prior year return.  Generally this is how it works.  In your case the past couple years you have not seen it because like every tax rule there are fort-two exceptions.  In your case when we deducted the state taxes in for example 2008 they did not do you any good.  When you got the refund in 2009 it was not taxable because you got no tax benefit for the deduction.  In 2009 we deducted state taxes and you got a refund in 2010 even though it was just applied to estimated tax.  You got a tax benefit from the deduction so it is taxable.  You also got a tax deduction for this same amount it is included on Schedule A, Line 5 (there are other things included on this line too). 

 

Not truthfully don’t you think it would be easier to just shoot you than try to explain that? 

 

This blog is a collection of questions from clients and the answers.  The goal of the blog is not to answer the questions you might have.  Most times the answers are based on each client’s personal situation.  Please do not rely on this information to make important financial and tax decisions.  The advice presented here is presented to give examples of the type of information you get as a client of a true tax professional, like Ray Simmons and the preparers he employs.  Advice regarding similar issues for you should be based on your personal situation. 

 Treasury Department Circular 230 Notice. “To ensure compliance with Treasury Department Circular 230, prospective clients are hereby notified that: any discussion of Federal Tax Issues contained or referenced to in this communication is not intended or written to be used and cannot be used by the prospective client or investor for the purpose of avoiding penalties that may be imposed on them under the Code.” Such discussion is written in connection with the promotion or marketing by Ray Simmons Corporation of the transactions or matters addressed in this correspondence.

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About taxdude8422

Basically I am just a tax nerd, have been all my life. However I have found the more open you are to opportunities the better off you will be in this world. That makes my what is know as an open networker on Linkedin, I will connect with anyone. I am not an expert on Linkedin by any means but one day when I was asking someone to connect I mentioned that I had just been refilled on invites. My new connect asked how I did that. I used that same line for the next month and got asked the same question four times. I started thinking there was a lot of little things it took my sometime to learn. Through this blog I plan to share some of those "Linked Secrets"
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