KevinthePRF Posted July 16, 2014 Share Posted July 16, 2014 I got a letter this past week from the IRS saying I owed more money from 2012 because I didn't report my state refund as income. My question is, how are state refunds taxed federally? The money is technically income from 2011. Is the IRS not double dipping taxing refunds? Link to comment Share on other sites More sharing options...
Mocountyskins Posted July 16, 2014 Share Posted July 16, 2014 Only do cash and keep it under your bed. Link to comment Share on other sites More sharing options...
Predicto Posted July 16, 2014 Share Posted July 16, 2014 I got a letter this past week from the IRS saying I owed more money from 2012 because I didn't report my state refund as income. My question is, how are state refunds taxed federally? The money is technically income from 2011. Is the IRS not double dipping taxing refunds? No, it isn't. That refund represents income from 2011 that you never paid federal taxes on in 2011 (because the state had been holding some or your cash and hadn't given it back to you yet). This kind of next year adjustment is perfectly normal and happens every year you get a state refund or owe state taxes. In my case, I always owe the state taxes when I do my returns, so my next year I owe LESS federal tax because my real income was less than I initially reported back when I did my taxes the year before. It makes perfect sense, but it's a pain to track it yourself. Use Turbotax. it takes care of all this stuff. Link to comment Share on other sites More sharing options...
Fergasun Posted July 16, 2014 Share Posted July 16, 2014 I think I got hit with this one year when I itemized and deducted sales tax (due to buying a car). I may have improperly deducted both state sales and income tax. The next time I did taxes, I was concerned because Turbotax did not tax my state refund. But it seems if you take the standard deduction, your state refund may not be counted as taxable income. Not legal advice.... Link to comment Share on other sites More sharing options...
twa Posted July 16, 2014 Share Posted July 16, 2014 Is the IRS not double dipping taxing refunds? how could it be double dipping if they never taxed you on it before? single dip....pay the people Link to comment Share on other sites More sharing options...
Forehead Posted July 16, 2014 Share Posted July 16, 2014 At least in Virginia, you are mailed a tiny paper form reminding you of what your refund was the previous year. Link to comment Share on other sites More sharing options...
Tulane Skins Fan Posted July 16, 2014 Share Posted July 16, 2014 The good news is that everyone in the tailgate is a tax lawyer on the side, so you have thousands of experts. The bad news is, its taxable. Link to comment Share on other sites More sharing options...
Fergasun Posted July 17, 2014 Share Posted July 17, 2014 TSF, Not in all situations... http://brrinc.org/articles/personal_tax_questions/why_is_my_refund_taxable_x.html But in general, it is probably true that he owes the tax. Link to comment Share on other sites More sharing options...
chipwhich Posted July 17, 2014 Share Posted July 17, 2014 At least in Virginia, you are mailed a tiny paper form reminding you of what your refund was the previous year. They do in all states. Link to comment Share on other sites More sharing options...
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