A state income tax refund that is received in 2017 but which is related to a pri

Question

A state income tax refund that is received in 2017 but which is related to a prior tax year is generally taxable in which of the following circumstances?
A. a form 1099 G is properly issued by a state to the taxpayer
B. the taxpayer itemized deductions in the prior year and claimed a state sale tax deduction
C. the taxpayer was subject to alternative minimum tax for the year that the state tax was paid
D. the taxpayer itemized deductions for the prior year in question, and the state tax paid reduced the taxpayer's federal taxes for the year

Explanation / Answer

Solution: a form 1099 G is properly issued by a state to the taxpayer

Explanation: A person might receive Form 1099-G reporting a local or state income tax refund. When a person claimed the local or state income taxes which were paid as an itemized deduction on last year's return, usually the local or state refund is taxable.

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