Your Tax Question - 072

Dear John, I received a 1099-G from the state. Why do I need to claim this amount on my taxes, isn’t that a double taxation event. Thanks, Gloria
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Hi Gloria,

Thanks for the question. The 1099-G from the state reports the amount of money that you had returned from the state last year. When you itemize your taxes on Schedule A of your Federal 1040 you are reducing your AGI (the taxable amount of income) by what was withheld from your income by the state income tax. When you do your state taxes after your federal and you have some of your income tax returned to you then you need to claim that returned amount on your following year’s taxes. If they did not do it this way you would have to correct your federal taxes right then but for convenience sake Congress has not gone this route. Instead, think of it as a FREE 1 year mini-loan from the federal government.

Thanks,
John

Your Tax Question - 071

In case you were wondering...

It is 4 am Eastern Standard Time on April 1. There are only 17 days left until taxes are due and I still have clients that have not gotten me their paperwork. Yes, we can, in a pinch, file for an extension but I am that irritating guy who in college got term papers written and handed in 2 months early. Now, I have the words of the White Rabbit echoing in my head - "Oh dear, I'm late, I'm late."

Anyway, this is just a friendly reminder to any of you who still need to have your taxes prepared that you have until the 18th of the month to get them filed.

John