Originally Posted by
Dumpster-Dee
This seems to be just a misunderstanding of IRS form 1099-G. Anything from the IRS is confusing, so it's easy to misinterpret this. Ya' ll don't have to jump all over each other when one of us makes an inaccurate statement. Can't you just explain why you think it isn't accurate. And George, I think you need to do some research on why it is best, in general, NOT to get a refund.
O.k. Dee, Maybe I came on too strong. I'm sorry if hurt anyones feelings here. I certainly didn't mean to "jump on anyone". I figured when I said "Doesn't work that way." that someone may have taken a little time "to do a little research" themselves. Don't know if they did or not. So let me see if I can clarify this a little.
http://www.irs.gov/publications/p525/ar02.html#d0e5298
Read under Miscellaneous Income, Recoveries. Now I'll post in part what it says about federal refunds incase someone is too lazy to click on the link: "Federal income tax refund. Refunds of federal income taxes are not included in your income because they are never allowed as a deduction from income."
Now when it comes to state refunds the rules change.:eek: "State tax refund. If you received a state or local income tax refund (or credit or offset) in 2011, you generally must include it in income if you deducted the tax in an earlier year. The payer should send Form 1099-G, Certain Government Payments, to you by January 31, 2012. The IRS also will receive a copy of the Form 1099-G. If you file Form 1040, use the worksheet in the 2011 Form 1040 instructions for line 10 to figure the amount (if any) to include in your income. See Itemized Deduction Recoveries , later, for when you must use Worksheet 2 , later in this publication.
If you could choose to deduct for a tax year either:
State and local income taxes, or
State and local general sales taxes, then
the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you did not choose to deduct for that year.
Example 1. For 2010 you can choose an $11,000 state income tax deduction or a $10,000 state general sales tax deduction. You choose to deduct the state income tax. In 2011 you receive a $2,500 state income tax refund. The maximum refund that you may have to include in income is $1,000, since you could have deducted $10,000 in state general sales tax.
Example 2. For 2010 you can choose an $11,500 state general sales tax deduction based on actual expenses or an $11,200 state income tax deduction. You choose to deduct the general sales tax deduction. In 2011 you return an item you had purchased and receive a $500 sales tax refund. In 2011 you also receive a $1,500 state income tax refund. The maximum refund that you may have to include in income is $500, since it is less than the excess of the tax deducted ($11,500) over the tax you did not choose to deduct ($11,200 − $1,500 = $9,700). Since you did not choose to deduct the state income tax, you do not include the state income tax refund in income.":confused::confused:
Me personally?
I have never jumped through all of those hoops to pay taxes on a state refund. And never will. Like I said, it depends on how each individual files.
This research took me less than 5 minutes. But the problem came in where people just will not take the advice given on here time and time again. RESEARCH AND READ! It would appear some would just rather ask silly questions or make asinine remarks. I really hope this clears a few things up for folks.
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