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Yardley CPA

Previous Year State Tax Refund

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New client, MFS, had state tax refund last year.  Where is the ATX schedule that allows you to input the previous year's Schedule A information to determine if the previous year's refund is taxable on this years return?  I know Schedule 1 contains the line to input the refund, but when you jump to the corresponding schedules, I do not see anywhere to input previous years Schedule A information.  

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5 minutes ago, Margaret CPA in OH said:

On Schedule 1, line 10, follow the arrow and choose the first option m 1040, Individual Income Tax Return and Schs 1-6 Ln 10, Sch 1 - Tax Refund. I think that is the worksheet you want.

Thank you!!!  That's exactly what I was looking for. 

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I thought you had only to compare the amount of the refund vs the standard deduction. So if the refund was $2,000 and the standard deduction was $9,350, as long as the itemized deductions were more than $11,350, the whole refund was taxable.

I normally only overwrite that box.

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1 hour ago, Lion EA said:

AMT. What would've been the Sales Tax deduction. Maybe something else I'm missing.

If you claimed sales tax the year before, and if your tax was zero (no tax benefit).

When there's AMT, we open up last year's return and reduce the income tax deduction by the amount of the refund to see if the federal tax changes. Then we print page 2 of the 1040 and the Sch A to prove it's not taxable.

This is where closing without saving is such a great idea.

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Yes, but all that goes to show that we do need prior year returns for new clients, and we do need to check various moving parts. It isn't always a simple formula.

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