Rose,who files as head of household,reported itemized deductions of $9,050 on her 2013 tax return.Her itemized deductions included $300 of state taxes paid.In 2014,she received a $175 refund of state taxes paid in 2013.What is the amount that Rose needs to report on her 2014 tax return?

Question

Quizplus · Accepted Answer

Since Rose filed as head of household and had itemized deductions of $9,050 on her 2013 tax return, it's likely that she also claimed the $300 state tax deduction. Therefore, when she received a $175 state tax refund in 2014, she must reduce her itemized deductions by this amount in accordance with the tax law. This means she should only report $100 on her 2014 tax return ($300 originally claimed minus $175 refund received equals $125, which then gets further reduced by claiming $25 less due to her income tax bracket as a head of household).

Rose,who Files as Head of Household,reported Itemized Deductions of $9,050