If federal refunds for 2006 received in 2007 are taxable, how is that reported on 2007 tax returns on what schedule form?
thanks

excon

Hello q:

What kind of refund would you receive from the federal government anyway????

If you're talking about the government refunding the amount you overpaid in income taxes, THAT'S NOT taxable.

Any OTHER refund might be.

excon

smearcase

Not a tax expert by any means but..
I think it is something like---If you itemize your fed return and take a deduction for state and local taxes paid, lets say in the amount of $ 100. Then you do your state tax and you get a $ 20 refund, so you really only paid $ 80 of State and local taxes. You should have paid fed tax on the additional $ 20 for which there is a line on the first page of 1040 and maybe the others too.
I believe it only applies if you itmize and only then if that deduction actually reduced your fed tax. They have a worksheet to determine if it did lower your tax and if it didnt you dont claim it. This is all from memory and my memory not the greatest. Hope it helps some

AtlantaTaxExpert

SmearCase has it right.

The refund from your STATE tax return is considered taxable income if you itemized the previous year and if the state taxes were not negated by the Alternative Minumum Tax.

Fortunately, if you use the same tax software in both years and you import the tax file from the previous year, the tax software almost universally does the calculation for you.

SantaClaus

If you itemized the previous year and recieved a refund from both the Federal and State, are both the refunds taxable or just the State refund.

Are both refunds taxable while filing Fed and State or just the State.

Taxable in Federal Filing Taxable in State Filing
Federal Refund ? ?
State Refund ? ?

Thanks,
SantaClaus
(Even Santa has to do his taxes!!!)

smearcase

The Fed. refund is not taxable, it is a refund for overpayment of taxes during the tax year.

See earlier comments about State refunds. There is a worksheet in the 1040 booklet you can use to determine what portion of your State refund is taxable/non-taxable.

MukatA

Federal tax refun is not taxable as you paid it from your tax paid income and never got any deduction for it.