A state income tax refund is only taxable to the extent that the taxpayer benefited from claiming the state income tax as a deduction on the previous year's tax return. This tool calculates the amount of the tax refund that is taxable on this year's federal tax return.
The blue fields are computed from the information you provide. The green fields are where you enter information. The first column shows where the information can be found in the tax return. Click this link for more help with this tool.
Previous Tax Year
Filing Status
Taxpayer's Birthday
Taxpayer Is Blind
Spouse's Birthday
Spouse Is Blind
State Tax Refund
State Income Tax
Sales Tax
Sales Was Tax Used
Real Estate Taxes
Personal Property Taxes
Total Itemized Deductions
Taxable Amount
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Explanation
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This is the previous tax year, which is the year that the state income tax was overpaid.
This is the filing status that was used on the previous year's federal tax return.
This is the taxpayer's birthday. This is used to determine the taxpayer's age at the end of the previous tax year, which in turn, is used to determine the standard deduction for the previous tax year.
This is the spouse's birthday. If the taxpayer is not married, this field should be left blank. This is used to determine the spouse's age at the end of the previous tax year, which in turn, is used to determine the standard deduction for the previous tax year.
Check this checkbox if the taxpayer is blind. This is used to determine the standard deduction for the previous tax year.
Check this box if the spouse is blind. If the taxpayer is not married, this checkbox should be left unchecked. This is used to determine the standard deduction for the previous tax year.
This is the amount of the tax refund. It usually comes on a form 1099-G. The amount of the state refund is on form 1099-G in box 2.
This is the amount of state income tax that was deducted on the previous year's federal tax return. If the checkbox on Schedule A, line 5a is not checked, this can be found on Schedule A, line 5a. If the checkbox on Schedule A, line 5a is checked, the sales tax was used instead of the state income tax and the tax refund in not taxable.
This is the estimated amount of sales income tax that you paid during the previous tax year. This amount could have been deducted on the previous year's federal tax return instead of the state income tax. This may have been a better option even if the sales tax is less than the state income tax. You can lookup the estimated sales tax using the IRS sales tax calculator at apps.irs.gov/app/stdc.
If the checkbox on Schedule A, line 5a is checked, check this box. It indicates that a value for the state sales tax was used instead of the state and local income taxes
This is the amount of real estate tax that was deducted on the previous year's federal tax return. This can be found on Schedule A, line 5b.
This is the amount of personal property tax that was deducted on the previous year's federal tax return. The most common example of this tax is the license fee portion of your car registration. This can be found on Schedule A, line 5c.
This is the total amount of itemized deductions declared in the previous tax year. This can be found on Schedule A, line 17.
This is the amount of the state tax refund that is taxable on this year's federal tax return.
There are many tests that are used to determine if or how much of the tax return is taxable. This is a brief explanation for how the result was determined.