Question

In 2018, Rachel received a $1,900 refund of state income taxes that she paid in 2017. In 2017, Rachel claimed itemized deductions of $6,900 and this total included $2,800 of state income taxes. How much of the refund, if any, must Rachel include in her 2018 gross income if the standard deduction for 2017 was $5,800?

Answer 1

$1,100

Step-by-step explanation:

The amount which Rachel must include in her 2018 gross income would be computed by applying an equation which is shown below:

= Itemized deductions - standard deductions

= $6,900 - $5,800

= $1,100

The $1,100 would be included in the $1,900 refund which is presented in her 2018 gross income.

The excess amount between itemized deductions and standard deductions would indicate the extra refund amount which is already included in its $1,900 refund amount