William,a single taxpayer,has $3,500 state income tax withheld from his paychecks in 2015.When he filed his 2015 state income tax return on April 15,2016,he calculated and received a $600 refund.The $600 refund was received on May 27,2016.What are the federal tax effects of the state income tax events of 2015 and 2016?
I.If his itemized deductions including state income taxes total $6,000 in 2015,William includes $300 in gross income for 2016,
II.If he did not itemize his deductions in 2015,none of the refund is included in 2016 gross income.

Question

William,a single taxpayer,has $3,500 state income tax withheld from his paychecks in 2015.When he filed his 2015 state income tax return on April 15,2016,he calculated and received a $600 refund.The $600 refund was received on May 27,2016.What are the federal tax effects of the state income tax events of 2015 and 2016?
I.If his itemized deductions including state income taxes total $6,000 in 2015,William includes $300 in gross income for 2016,
II.If he did not itemize his deductions in 2015,none of the refund is included in 2016 gross income.
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Quizplus · Accepted Answer

The refund of state income taxes is included in gross income only if the taxpayer itemized deductions in the prior year.

William,a Single Taxpayer,has $3,500 State Income Tax Withheld from His