D.=A0Stussy posted;
- quote -

You are correct. I intended to note the "G" designation,
and slipped.

Thanks.

Bill

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Angelo Campanella <a.campanella[at]att.net> wrote:
- quote -

Are you going to file electronically or with a paper return?
If by paper, then the answer is simple. Line 10 of Form
1040 asks ONLY for the TAXABLE portion of your income tax
refund. The instructions for Line 10 of Form 1040 (page 23
of the Instructions) clearly state that if you did not
itemize last year, none of your refund is taxable, so you
can just not enter it into TurboTax. Keep the 1099-G for
your records with a note to yourself that you took the
standard deduction in 2004. Do not send the 1099-G to the
IRS and there is not need for any explanation unless asked
later.

If you plan to file electronically, I would enter the amount
from the 1099-G when asked (only because I don't know if the
electronic form provides more data than the paper form) and
then later TurboTax should ask if you took the standard
deduction in 2004 or if you itemized. Just tell TT that you
took the standard deduction in 2004 and it should ignore the
income tax refund. But, to be on the safe side, look at
Line 10 of your 1040 and make sure that the amount is zero
or blank. (I have not used TT since tax year 2001, but this
is how all the consumer tax preparation programs work.)

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Bill wrote:
- quote -

Casinos don't use a 1099-G. They use a W2-G. The 1099-G is
for government entity payments. The W2-G is for private
sector gambling winnings.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Victor Roberts wrote:

- quote -

Unfortunately, I had two versions of the 2004, and lost
track of the one used to file, if I saved it as such at all.
I can't find the strings to pull in TT to swap the other
version where I did not itemize. TT I guess does not like
what-if's.

I'd have to start 05 from scratch, and I have already spent
3 days on and off so far this season, most of it sweeping
together all the bits and pieces of raw data. Just now
beginning the "simple" task of keyboard entry. Tax code is
one of the last things I think anyone should try to
mechanize with software. The logic is too convoluted. It's
not even logic and definitely not fuzzy logic. It is
illogically deterministic.

- quote -

I do that routinely.

- quote -

It's not the logical stuff that gets me; it's the illogical
stuff that baffles me.

- quote -

It's not taxable because my filed 2004 1040 listed and
calculated to the final figure the satandard deduction.

There have been many years (most all recently) that I paid
estimated tazes in excess of what finally calculated to be
due.

The problem is a coincidence of the 1099-g showing up for me
for the first time at the same time the confusion over
itemizing and standard occurred.

Angelo Campanella

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Angelo Campanella summed up his post with:

- quote -

From you earlier comments, you make it clear that you did
_not_ itemize in 2004, therefore you should have deduced
from our answers that you have no need to report the 1099-G
income at all. As I pointed out, one software program --
TaxWise -- offers an opt-out, for those who didn't itemize
or weren't subject to state income taxes.

And others simply advised you to not report the 1099-G (for
a state tax refund) if you didn't itemize in 2004. Hope you
understood that -- although your reference to a handwritten
note implies otherwise.

Bill

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

an_ordinary_guy_158[at]hotmail.com (Bill) wrote:

- quote -

I haven't used TT since TY 2001 but at that time it asked
all the right questions about the previous year's tax return
to determine if the state refund was taxable and if so, how
much was taxable. I would certainly expect that it still
has this feature.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Angelo Campanella <a.campanella[at]att.net> wrote:

- quote -

The 1099-G should never be submitted. Why not enter the
amount into TurboTax, answer the questions from TurboTax
about 2004 (which should be pre-answered since I believe you
said you used TT for 2004) and TT will tell you how much of
this refund is taxable? If you disagree with the answer, go
over the calculations by hand using the instruction for Form
1040. If you don't understand how to do this, perhaps you
should see a tax professional. If you do not include the
amount from the 1099-G and if it is taxable income, then
your opinion on the matter will not matter. You will be
liable for the taxes and interest and perhaps a penalty.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

MyVeryOwnSelf wrote:

- quote -

A lot of good answers accumulated before I could get back to
this group.

Thanks, all!

I eventually figured out that its applicability had to do
with whether or not I did itemize my deuctions for the
previous tax year.

I confused the issue considerably for '04 by calculating as
"what if?.." my itmeizing opportunities. I did find for '04
that it was not advantageous to do that, so the the final
numbers I entered in the 1040 followed the standard deuction
route. However, when I printed out the paper storm of final
sheets via Turbotax, I did not sift out all the itemized
sheets; some were included in my mail-in even though not
used. My clerical mistake.

- quote -

To be sure, it is clear to me that when calculating for
instance taxes on '05, refunds from an '04 return as a
consequence the quartely 04 payemnts of necessity banked on
the 04 estimated payment as-is. The logic is clear to me..
no problem.

Someone else here really then answered the question I had
implied ("why a 1099-g now"); the answer being that more
states are now doing this for more transactions... Hence
1099-g now occurs to persons who never had received one
before.

- quote -

I agree, that's not cricket.

- quote -

I like to see both ends of the stick at the same time. I
have NO concept of where this misnomer is retaken up.
Perhaps someone could point it out... TT is not very helpful
in that regard... I don't like situations where someone says
"Trust me!").

- quote -

I have found nothing in TT that gives any hints. I'll just
include a copy of the 1099-g separately with a handwritten
note stating my opinion (chiefly along the lines settled
here).

Angelo Campanella

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Angelo Campanella" <a.campanella[at]att.net> wrote:

- quote -

It is your state refund and is possibly income depending on
whether you itemized last year and deducted your state taxes

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

- quote -

See the heading "State Tax Refund" in IRS Publication 525.

Suppose somebody owed $10,000 in state income tax for 2004,
but paid $12,000 in estimated tax for 2004 all in 2004 (to
keep it simple).

They'd claim a $12,000 state-tax deduction on their 2004
federal return. They'd get a $2,000 refund on their 2004
state return. So really, they'd be entitled to only $2,000
federal deduction for 2004 state taxes. Form 1099-G resolves
this difference by turning the extra $2,000 into income for
2005 (when the refund is received).

If things didn't work this way, people might go overboard.
Somebody might make a $100,000 state estimated payment on
December 31, get $90,000 of it back as a refund, but claim
the whole $100,000 as federal deduction.

I used TurboTax when this happened to me, and the software
did the calculation properly. The details depend on things
like (a) taking standard vs. itemized deduction in 2004, and
(b) if the final 2004 state estimated payment was in 2005 or
2004.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Angelo Campanella" <a.campanella[at]att.net> wrote:

- quote -

The refund of state overpayment of income taxes IS taxable
in the year received assuming it was deducted for federal
purposes in the year made. If you got benefit for the
deduction, you'll be taxable on the refund. If you did not
get a federal tax benefit for the state income tax payments,
you will not be taxable on the refund. By way of example:
assume you're in at a 30% federal marginal tax rate, and in
December, you estimate you will have to pay an additional
$3,000 when you file your federal tax return the following
year, so prior to year end, you make a state estimated
payment of $10,000. As that payment will generate a federal
deduction, at a 30% tax rate that's a $3,000 reduction in
fed taxes and voila, you're fed tax payment due with your
return goes to zero. In this case, you certainly obtained
federal benefit for the deduction of state income tax
payments. If the refund were non-taxable, everyone would
simply massively overpay the state taxes to eliminate their
fed tax liability and wait for the state refunds. While
this example omits things like AMT considerations, it
demonstrates the point as to why state tax refunds are
taxable.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Angelo Campanella" <a.campanella[at]att.net> wrote

- quote -

If you itemized deductions (Schedule A) in 2004 and deducted
the state taxes paid or withheld, then the refund received
in 2005 (even if it was applied toward the state estimated
for 2005) is income to you.

Feel obligated to include it as income, then deduct it off
again on Schedule A (if you itemize this year) along with
the other state taxes paid or withheld.

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

a.campanella[at]att.net (Angelo=A0Campanella) posted:

- quote -

Yep. It's routine. The 1099-G has been used for years to
ensure compliance. Primary users are state Lotteries -- who
use it to report winnings -- (and also Casinos). But states
and cities with income taxes also now use it, to report any
refunds of their income taxes.

If you itemized your deductions the previous year ... and
included your _overpayment of state income tax ... then you
received an extra tax deduction to which you weren't
entitled. And this 1099-G reminds you to correct the
record.

If you didn't itemize, then including the refund amount has
no effect. In fact, there's probably an "opt-out"
alternative: TaxWise has one, for those who either didn't
pay state income taxes or didn't claim a deduction for them.
I can only assume Turbo-Tax must offer one. Perhaps someone
with TT will reply. If not, in another thread regarding TT
issues, someone posted the URL of a special group for TT
users.

Bill

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"Angelo Campanella" <a.campanella[at]att.net> wrote:

- quote -

Sorry, but whether it's taxable income or not isn't a matter
of your opinion.

Did you itemize Federal deductions on your 2004 1040,
Schedule A? If not, ignore the 1099-G. Otherwise see the
instructions for line 10 of the 1040 to determine the
taxable amount.

--
Phil Marti
Clarksburg, MD

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Angelo Campanella wrote:

- quote -

Did you itemize your deductions on Schedule A in 2004? If
not, don't worry about the refund check and 1099-G, it is
NOT income.

If you DID itemize your deductions on Schedule A, then some
or all of the refund is probably taxable - to the extent
that you received a "tax benefit" by claiming the taxes paid
in 2004. There is a worksheet in your 1040 instructions
(Line 10, pages 23-24) explaining what you have to do and
how to do it.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

This is a first.

Each year, I extra-pay estimated tazxes to avoid trouble.

This year (for 2005), I receive a 1099-G on my state extra
payment "refund" of about $2,000.

This is NOT a taxable event, or even a reportable event in
my opinoin.

This does not compute.

TurboTax is asking for it, and I suspect that someone might
guide it into a taxable event.

I am tempted to not enter its numbers into my 2005 1040, but
rather supply a copy of this 1099-G (a copy of which
undoubtedly has already been sent to IRS by the state) with
a written note that this was a payement I made to my state
that was applied as a normal estimated tax payment.

Can someone clarify this?

Thanks,

Angelo Campanella

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >