Opal deducted $2,400 of state income taxes on her tax return last year. This year she received a state income tax refund of $170. What amount of the refund, if any, should Opal include in her gross income if last year her total itemized deductions exceeded the standard deduction by $350?

Question

Quizplus · Accepted Answer

Opal only needs to include the portion of her state income tax refund that provided a tax benefit in the previous year. Since she only received a benefit of $170 (less than the $350 excess of her itemized deductions over the standard deduction), she does not need to include any of the refund in her gross income. Therefore, the correct answer is (D) $170.

Opal Deducted $2,400 of State Income Taxes on Her Tax