Question

Pierre, a cash basis, unmarried taxpayer, had $2,480 of state income tax withheld during 2018. Also in 2018, Pierre paid $620 that was due when he filed his 2017 state income tax return and made estimated payments of $1,736 towards his 2018 state income tax liability. When Pierre files his 2018 Federal income tax return in April 2019, he elects to itemize deductions, which amount to $15,200, including the state income tax payments and withholdings, all of which reduce his taxable income. As a result of overpaying his 2018 state income tax, Pierre receives a refund of $992 in 2019. The standard deduction for single taxpayers for 2018 was $12,000.

a. What is Pierre's 2018 state income tax deduction?

b. How much of the $992 will Pierre include in his 2019 gross income?

**SHOW WORK AND EXPLAIN**

Answer 1

solution:
given that
Pierre, a cash basis, unmarried taxpayer, had $2,480 of state income tax withheld during 2018. Also in 2018,
Pierre paid $620 that was due when he filed his 2017 state income tax return and made estimated payments of $1,736 towards his 2018 state income tax liability.
When Pierre files his 2018 Federal income tax return in April 2019, he elects to itemize deductions, which amount to $15,200, including the state income tax payments and withholdings, all of which reduce his taxable income.
As a result of overpaying his 2018 state income tax, Pierre receives a refund of $992 in 2019. The standard deduction for single taxpayers for 2018 was $12,000.
a). Calculation of State Income Tax Deduction :-

State Income Tax Deduction = $2480 + $620 + $1736 = $4836

b). $992 is included in Gross Income and Reduce Gross Income by that Amount as Itemize Deduction .