Carlos had $3,950 of state taxes withheld from his salary this year. If he deducts the full amount as an itemized deduction and receives a refund in the following year, he must file an amended return and reduce the deduction he received by the amount of the refund.

Question

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The refund of state taxes that were deducted in a previous year is typically reported as income in the year it is received, rather than requiring an amended return for the previous year.

Carlos Had $3,950 of State Taxes Withheld from His Salary