Dirk,who uses the cash method of accounting,lives in a state that imposes an income tax (including withholding from wages).On April 14,2011,he files his state return for 2010,paying an additional $800 in state income taxes.During 2011,his withholdings for state income tax purposes amount to $4,550.On April 13,2012,he files his state return for 2011,claiming a refund of $900.Dirk receives the refund on August 3,2012.If he itemizes deductions,how much may Dirk claim as a deduction for state income taxes on his Federal income tax return for calendar year 2011 (filed in April 2012)?

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Quizplus · Accepted Answer

Dirk can deduct the state income taxes paid in 2011, which include the $800 paid in April 2011 for the 2010 tax year and the $4,550 withheld during 2011, totaling $5,350.

Dirk,who Uses the Cash Method of Accounting,lives in a State