Question

Myrna and Geoffrey filed a joint tax return in 2015. Their AGI was $85,000, and itemized deductions were $13,700, which included $4,000 in state income tax. In 2016, they received a $1,800 refund of the state income taxes they paid in 2015. The standard deduction for married filing jointly in 2015 was $12,600. Under the tax benefit rule, what amount of these state income tax refund is included in gross income in 2016?

Answer 1

The amount of these state income tax refund is included in gross income in 2016 is $1,100

Step-by-step explanation:

The computation of the income tax refund is shown below:

= Itemized deductions - standard deduction

= $13,700 - $12,600

= $1,100

Since we have to find out the refund amount which would be included in the gross income so we consider the amount of the deductions which is given in the question. The other information which is given in the question is not relevant. Hence, ignored it

The amount recovered would be adjusted to that particular year only it would not be carried forward.