During 2014,Christiana's employer withheld $1,500 from her wages for state income taxes.She claimed the $1,500 as an itemized deduction on her 2014 federal income tax return which included $8,000 of itemized deductions.Christiana is single.On her 2014 state income tax return,her state income tax was $900.As a result,Christiana received a $600 refund in 2015.What amount must Christiana include in income in 2015?

Question

Quizplus · Accepted Answer

Christiana must include in income the amount of the state income tax refund that resulted in a tax benefit in a prior year, which in this case is the $600 refund she received in 2015. She claimed the full $1,500 as an itemized deduction on her 2014 federal income tax return and received a tax benefit from it, but then received a partial refund of $600 in 2015. Therefore, she needs to include the $600 in income on her 2015 federal income tax return.

During 2014,Christiana's Employer Withheld $1,500 from Her Wages for State