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?
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