Question

If the state's tax calculation starting point is federal adjusted gross income, then __________,

The state calculation of taxable income may exclude the taxpayer's standard or itemized deductions as claimed at the federal level.

The state calculation of taxable income includes the taxpayer's standard or itemized deductions as claimed at the federal level.

The state has conformed without exception, by the legislature, to the current IRC.

Both choice B and C are true.

Answer 1

The state calculation of taxable income may exclude the taxpayer's standard or itemized deductions as claimed at the federal level.

Explanation:

On federal income tax forms, standard and itemized deductions, and the personal exemption, are below-the-line, meaning that they are claimed after arriving at one’s adjusted gross income), but before arriving at one’s federal taxable income. Therefore, if a state uses federal taxable income as the starting point for its income tax calculations, then it begins by incorporating filers’ standard (or itemized) deductions and personal exemptions as claimed at the federal level. If a state instead uses federal adjusted gross income as its starting point, then it begins its calculation without the inclusion of these deductions or exemptions.