taxable portion of state refund

[ljwalters]

I think the ATX calculations for the taxable portion of the CA state refund is wrong. If it is not could some one tell me the calculations.

Refund from last years state return 1099G was $432. The total Sch A deduction were $35,443. The state taxes (06) were $3,025 the local taxes were $899. There was no AMT. MFJ return.

The 1040 Line 10 worksheet (07 return now) at the top calculates the rufund as taxable amt $256. Why is this and is it correct.

Seems to me it should be the whole amount.

[jainen]

>>it should be the whole amount<<

With that high of deductions, they must have high income and correspondingly high sales tax.

[GeorgeM]

This happened to me about 2 weeks ago and no one could figure out why it was wrong. I reported it to ATX but have never heard anything back.

You will have to adjust it manually/

[jainen]

>>no one could figure out why it was wrong<<

Another reason this can happen is if the refund includes a fourth quarter estimate in January. Since that payment was not made in 2006 it wasn't deductible, so getting it refunded isn't taxable.

[ljwalters]

Thanks everyone I have been changing them in all my returns all along. Just wanted to make sure I wasn't missing something. When you work in a one man office, and you get tired, you strat to second guess yourself.

cutting out early tonight ( only 7:30 )

[michaelmars]

NY is wrong too, the sales tax adjustment has to be made to the refund amount

[joanmcq]

High income means limitation on itemized deductions. Can also be a limiting factor.

[MakeMini]

I do CA returns and got tripped up by this as well. Before you attribute it to ATX check out the ATX help for Line 10, specifically:

"4. Your 2006 state and local income tax refund is more than your 2006 state and local income tax deduction minus the amount you could have deducted as your 2006 state and local general sales tax".

And of course you know that if the client itemized in 2006 and claimed sales tax paid rather than state tax paid then the refund is not taxable in 2007.

[ljwalters]

Thanks MakeMini......

They did have pretty high income and that does make the difference. AYX was right after all.

[jainen]

>>ATX was right after all.<<

That's what I was trying to tell you. I have seen a lot of complaints about ATX, and it usually goes back to incorrect data entry or interpretation. No doubt ATX could have an easier interface and better diagnostics and tech support, but taxes are complex and every program has a steep learning curve.