Question

Kurstie received an $800 state income tax refund this year. Kurstie deducted $3,000 of state income taxes paid in the prior year as part of her itemized deductions. Which of the following statements regarding the taxability of Kurstie's refund is true?

a. If Kurstie’s itemized deductions exceeded the standard deduction by $200, then the $800 refund is included in gross income.
b. If Kurstie’s itemized deductions exceeded the standard deduction by $200, then $200 of the refund is included in gross income.
c. If Kurstie claimed the standard deduction instead, then the $800 refund is taxable.
d. Kurstie must include $3,000 in gross income in the current year

Answer 1

b. If Kurstie's itemized deductions exceeded the standard deduction by $200, then $200 of the refund is included in gross income.

Step-by-step explanation:

Based on the information given we were told that the amount of $3,000 of the state income taxes paid as part of her itemized deductions was deducted Which therefore means that the statements regarding the taxability of Kurstie's refund that is true will be : IF THE ITEMIZED DEDUCTIONS EXCEEDED THE STANDARD DEDUCTION BY $200 the amount of $200 OF THE REFUND will have to be included in the GROSS INCOME .