Question

Hannah is a California taxpayer. She is retired and receives a pension payment of $1,000 during 2017, and then in 2018 receives a letter from the pension administrator informing her that an internal audit of the pension computer system revealed that the administrator made a mistake and overpaid the $1,000 benefit in 2017. As such, they now want Hannah to repay (the $1,000 overpayment) by writing a check back to the pension plan in 2018. Under Section 1341, Claim of Right, Hannah is entitled to claim a deduction for what amount of the overpayment on her California income tax return for tax year 2018? Group of answer choices

$500 $600 $1,000 $3,000

Answer 1

As per the California Income Tax Act Under Section 1341 Descrive as follow

upto the year of previous year 2017 assessee can claim WHICH EVER IS MORE BENEFIT.

Either claim the Credit OR If the amount repay is less than $3,000 then deduct the repayment as miscellaneous itemized deduction.

But AFTER 1-1-2018 miscellaneous itemized deduction is NO LONGER POSSIBLE so as result for dedution Under section 1341 repayment amount must be above $3,000.

So answer of this question Hammah is Eligible for dedution is $1,000 under Miscellaneous itemized deduction.