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Simon is single and a stockbroker for a large investment bank. During 2019, he has withheld...

Simon is single and a stockbroker for a large investment bank. During 2019, he has withheld from his paycheck $2,250 for state taxes and $400 for city taxes. In June 2020, Simon receives a state tax refund of $145. Enter the amount Simon should include in his 2020 taxable income based on the scenarios stated below.

How much is included in 2020 taxable income if Simon has itemized deductions other than state and city income taxes of $9,650?

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How much is included in 2020 taxable income if Simon has itemized deductions other than state and city income taxes of $9,650?

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Simon must include $6050 of the income tax refund in his 2020 taxable income. As in part b, Simon has deducted $2,650 in state and city taxes in 2019 when his actual state and city taxes should have been $2,505[$400 + ($2,250 - $145 refund)]. However, even though Simon's

reported deductions of $12300 ($2,650 + $9650) exceed his actual deductions of $12155 ($9650+ $2,505) by $145, Simon has benefited

only by the amount his reported deductions exceed the standard deduction of $6,200. Remember, at a minimum Simon is entitled to the standard deduction. Therefore, Simon only includes $6050 ($12300 -$6,200) of the tax refund in his income for 2020.

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