Tom and Betsy,who are married filing jointly,reported a standard deduction of $12,200 on their 2013 tax return.They paid $500 to the state for income taxes in 2013.In 2014,they received a $125 refund of state taxes paid in 2013.What is the amount that Tom and Betsy need to report on their 2014 tax return?

Question

Quizplus · Accepted Answer

The $125 refund of state taxes paid in 2013 is included in Tom and Betsy's 2014 income. However, they can deduct the $500 state income taxes paid in 2013 on their 2014 tax return. Therefore, the net amount that they need to report on their 2014 tax return is $0.

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