How does itemized deduction affect state income tax?

Taxpayers who itemize deductions on their federal income tax returns can deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes. Initially, all state and local taxes not directly tied to a benefit were deductible against federal taxable income.

Are state tax refunds deductible?

If you chose general sales taxes, none of your refund is taxable. If you chose state and local income taxes, your state refund is taxable. However, it’s only taxable to the extent that it’s more than the refund you would have received by choosing the larger refund from these: Standard deduction.

Taxpayers who itemize deductions on their federal income tax returns can deduct state and local real estate and personal property taxes, as well as either income taxes or general sales taxes. The Tax Cuts and Jobs Act limits the total state and local tax deduction to $10,000.

Is the state tax refund tax deductible?

For instance, if you didn’t itemize your deductions last year and instead you took the standard deduction, then your state tax refund from the previous year is tax-free this year. Sales Tax Deducted, But Not State Income Tax?

What’s the difference between standard deduction and itemized deduction?

The difference between the taxpayer’s itemized deductions taken in the prior year and the standard deduction amount for the prior year, if the taxpayer was not precluded from taking the standard deduction in the prior year.

Is the state of California tax refund taxable?

We are in a high tax state (California) and hit AMT, so the state and local taxes are not deductible. However, it seems that TT still consider the state refund as taxable. Hypothetical numbers, say I got $800 state refund from California for tax year 2016.

How are state and local tax deductions treated?

The difference between the taxpayer’s total itemized deductions taken in the prior year and the amount of itemized deductions the taxpayer would have taken in the prior year had the taxpayer paid the proper amount of state and local tax; or