Brad, who uses the cash method of accounting, lives in a state that imposes an income tax (including withholding from wages).On April 14, 2019, he files his state return for 2018, paying an additional $600 in state income taxes.During 2019, his withholdings for state income tax purposes amount to $3,550.On April 13, 2020, he files his state return for 2019 claiming a refund of $800.Brad receives the refund on June 3, 2020.If he itemizes deductions, how much may Brad claim as a deduction for state income taxes on his Federal income tax return for calendar year 2019 (filed in April 2020)?
A)$3,350
B)$3,550
C)$4,150
D)$5,150
E)None of these

Question

Quizplus · Accepted Answer

Brad can include the state income tax withholding ($3,550) and the additional state income tax paid ($600) in his itemized deductions for the 2019 tax year. The refund received in 2020 does not affect the amount of the deduction for the previous year. Therefore, Brad may claim a deduction of $4,150 on his Federal income tax return for calendar year 2019.

Brad, Who Uses the Cash Method of Accounting, Lives in a State