At the end of 2006, I sent $4K (which was after tax money) to IRS since I believed that I may owe taxes. After I prepared my tax return, I now have a net refund of little over $5K. When I get my 1099-G next year, how do I account for the fact that $4K of the refund was paid with after tax money so that I don't pay taxes on it again on my 2007 return? Thanks in advance.
Rishi.
You won't get a 1099-G. Federal tax payments aren't deductible on the Federal return, nor are refunds taxable.
-- Phil Marti Clarksburg, MD
snipped-for-privacy@gmail.com asked:
Not to worry. As far as the IRS is concerned, your refund is not income. The only possible issue would arise if you had itemized a _state_ income tax return, and deducted your _federal_ taxes paid. BTW, I've never heard of the IRS issuing 1099-G's for refunds of tax overpayment. Bill
If you deducted taxes paid in 2006 on your 2006 Schedule A, that $4K was (or at least should have been) included in that amount. In other words, you didn't count that $4K as income in 2006 because you used it to make a tax payment. Since you're getting it back, you didn't actually pay taxes with it after all and must include it as income in 2007 since you did not do so in 2006. In other other words, you DIDN'T pay taxes on that 4K in 2006, so you must do so in 2007. If you didn't itemize in 2006, you probably won't even get a
1099G. If you do, you can ignore it. Well, don't actually ignore it -file it away with the rest of your 2007 paperwork- but don't include that amount as income on the tax form.
-- John D. Goulden
You will not get a 1099-G for a FEDERAL REFUND
You do not have to, it's not taxable income.
You are confusing this with STATE tax refunds, if your STATE ES DEPOSITS were deducted as contributed, and you deducted it on your Federal Schedule A, recovery of the deduction as income in the following year as a "Taxable STATE income tax refund"
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