Why is my state tax refund taxable?

Many taxpayers are dismayed when they find their state tax refunds from the prior year become taxable income for this year. This video explain why this can happen sometimes, and how to calculate the taxable portion of a state tax refund.

To find out all about state and local tax deductions, click here:    • All about SALT - Deducting State and ...  

Resources and Information:

IRS Publication 525: "Taxable and Nontaxable Income" (contains worksheets to calculate the taxable portion of a state tax refund): https://www.irs.gov/pub/irs-pdf/p525.pdf

IRS Schedule A: "Itemized Deductions": https://www.irs.gov/pub/irs-pdf/f1040...

Instructions for IRS Schedule A (contains the worksheet and tables for calculating a sales tax deduction): https://www.irs.gov/pub/irs-pdf/i1040...

IRS Schedule 1: "Additional Income and Adjustments to Income": https://www.irs.gov/pub/irs-pdf/f1040...

The Tax Geek on Twitter: @taxgeekusa

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Image/Video Credits:

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Intro Music: "Bluesy Vibes" - Doug Maxwell - YouTube Audio Library

Outro Music: "Modern Attempt" - Track Tribe via YouTube Audio Library

DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or investment advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or investment professional.

The information in this video is current as of date of publication, and is subject to changes.