During 2015,Mark's employer withheld $2,000 from his wages for state income tax.Mark claimed the $2,000 as an itemized deduction on his 2015 federal income tax return.His total itemized deductions for 2015 were $8,000.Mark's taxable income for 2015 was a negative $20,000 due to substantial business losses.Mark received the $2,000 as a refund from the state during 2016.What amount must Mark include in income in 2016?

Question

Quizplus · Accepted Answer

Since Mark's taxable income was negative in 2015, he did not benefit from the state tax deduction. Therefore, the refund is not taxable in 2016.

During 2015,Mark's Employer Withheld $2,000 from His Wages for State