Felix,a single taxpayer,claimed $180 of state tax as an itemized deduction on his 2015 tax return.The total itemized deductions on his tax return were $6,350.In 2016,he received a $25 refund from the state.What is the amount Felix has to report on his 2016 tax return?

Question

Quizplus · Accepted Answer

Felix received a state tax refund in 2016, which reduces the amount of state tax he paid in 2015. However, since he claimed the $180 state tax as an itemized deduction in 2015, he received a tax benefit from that deduction. Therefore, he must include the $25 refund as income on his 2016 tax return to account for the tax benefit he received from the $180 deduction in 2015. The answer is $25, which is choice C.

Felix,a Single Taxpayer,claimed $180 of State Tax as an Itemized