Question

Graciela, who is single, reported itemized deductions of $6,450 on her 2017 tax return. Her itemized deductions included $200 of state taxes paid. In 2018, she received a $150 refund of state taxes paid in 2017. What is the amount that Graciela needs to report on her 2018 tax return?

Answer 1

$100

Step-by-step explanation:

Since the standard deduction for 2017 was $6,350, and Graciela only reported $100 more, she needs to report only $100 of the state tax refund. State tax refunds are not considered income unless you itemize your deductions, and in case you did, like Graciela, you must only report the amount that exceeds the standard deduction.