Tom and Betsy,who are married filing jointly,reported a standard deduction of $12,600 on their 2016 tax return.They paid $500 to the state for income taxes in 2016.In 2017,they received a $125 refund of state taxes paid in 2016.What is the amount that Tom and Betsy need to report on their 2017 tax return?

Question

Quizplus · Accepted Answer

Since Tom and Betsy took the standard deduction in 2016, the state tax refund of $125 received in 2017 is not taxable. Taxpayers only need to report their state tax refund as income if they itemized deductions in the year the taxes were paid.

Tom and Betsy,who Are Married Filing Jointly,reported a Standard Deduction