Phyllis,a calendar year cash basis taxpayer who itemized deductions,overpaid her 2013 state income tax and is entitled to a refund of $400.Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2014.She is required to recognize that amount as income in 2014.

Question

Quizplus · Accepted Answer

It does not matter for Federal income tax purposes whether the overpayment is refunded or applied toward the 2014 state income tax liability if the overpayment resulted in a tax benefit.

Phyllis,a Calendar Year Cash Basis Taxpayer Who Itemized Deductions,overpaid Her