Phyllis, who is single, has itemized deductions totaling $20,000. She overpaid her 2017 state income tax and is entitled to a refund of $400 in 2018. Phyllis chooses to apply the $400 overpayment toward her state income taxes for 2018. She is required to recognize that amount as income in 2018.

Question

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Phyllis is required to recognize the $400 overpayment as income in 2018 because it is a refund of a previously deducted expense.

Phyllis, Who Is Single, Has Itemized Deductions Totaling $20,000