Check out some similar questions!

mtnbkr · Jan 26, 2009, 04:57 AM

I got married this past year. My wife and I both received refunds in 2007 from the state. We both live in MD now, and both have refunds from MD. For this year, we plan to file jointly. When using a particular tax software (not sure if I'm supposed to say which one), they allow you to put in the two refund amounts, then go through a process of entering in 2007 information to find out if the full refund amount is taxable for 2008. It allows me to enter 2007 information for only one party, either myself or for my wife. It doesn't allow for a different entry for each state refund I put in. They do give you two options, 1 is to assume the full amount is taxable, which they say is the easier option, but may end up with you paying more in taxes, 2 is the option I am trying to do, which will let you put in some of your 2007 information to find out how much is taxable. I'm stumped. Thanks.

MukatA · Jan 26, 2009, 05:52 AM

You will enter state tax refunds received in 2008 (not 2007) only if you claimed state tax deduction as itemized deduction on your federal tax return for 2007.
If you did not itemize your deductions in 2007, then you will not be asked to enter state tax refund you received in 2008.

mtnbkr · Jan 26, 2009, 06:12 AM

Originally Posted by MukatA

You will enter state tax refunds received in 2008 (not 2007) only if you claimed state tax deduction as itemized deduction on your federal tax return for 2007.
If you did not itemize your deductions in 2007, then you will not be asked to enter state tax refund you received in 2008.

I'm not entirely following. I think we are saying the same thing but maybe my word choice was poor. I'm talking about state refunds from 2007 tax year filing, that I received in 2008. We did both itemize our taxes last year.

AtlantaTaxExpert · Jan 26, 2009, 11:44 AM

If you BOTH itemized on your 2007 returns, then the refunds for BOTH of you is considered to be taxable income on your 2008 federal tax return.

Just add the two refund amounts together and submit that one figure to the tax software for both of you when you file jointly.

mtnbkr · Jan 26, 2009, 11:47 AM

Originally Posted by AtlantaTaxExpert

If you BOTH itemized on your 2007 returns, then the refunds for BOTH of you is considered to be taxable income on your 2008 federal tax return.

Just add the two refund amounts together and submit that one figure to the tax software for both of you when you file jointly.

So I don't need to run through the little tool to check how much is taxable? We did both itemize, so because of this, the entire amounts count as taxable income for 2008? Thank you.

AtlantaTaxExpert · Jan 26, 2009, 12:28 PM

Yes, that is correct.