Posted: May 2nd, 2016

how much may she claim as a deduction for state income taxes on her Federal return for calendar year 2012 (filed April 2013)?

Norma, who uses the cash method of accounting, lives in a state that imposes an income tax. In April 2012, she files her state income tax return for 2011 and pays an additional $1,000 in state income taxes. During 2012, her withholdings for state income tax purposes amount to $7,400, and she pays estimated state income tax of $700. In April 2013, she files her state income tax return for 2012, claiming a refund of $1,800. Norma receives the refund in August 2013.
If an amount is zero, enter “0”.

a. Assuming that Norma itemized deductions in 2012, how much may she claim as a deduction for state income taxes on her Federal return for calendar year 2012 (filed April 2013)?

B. Assuming that Norma itemized deductions in 2012, how will the refund of $1,800 that she received in 2013 be treated for Federal income tax purposes?

Norma will have income or a loss of $____

C. Assume that Norma itemized deductions in 2012 and that she elects to have the $1,800 refund applied toward her 2013 state income tax liability. How will the $1,800 be treated for Federal income tax purposes?

Norma will have an income or a loss of $____.

d. Assuming that Norma did not itemize deductions in 2012, how will the refund of $1,800 received in 2013 be treated for Federal income tax purposes?

the amount of $____ will be included as income or a loss in 2013.