Tom and Betsy, who are married filing jointly, reported a standard deduction of $12,400 on their 2014 tax return. They paid $500 to the state for income taxes in 2014. In 2015, they received a $125 refund of state taxes paid in 2014. What is the amount that Tom and Betsy need to report on their 2015 tax return?

Question

Quizplus · Accepted Answer

Since Tom and Betsy used the standard deduction in 2014, they did not benefit from the state tax payment as an itemized deduction. Therefore, the state tax refund of $125 is not taxable in 2015.

Tom and Betsy, Who Are Married Filing Jointly, Reported a Standard