Jacob, who is from England, had $348 of state income tax withheld in 2022. His total income was $5,800 in 2022. The deduction of the state income taxes helped reduce his taxable income, as illustrated below.
Wages |
$5,800 |
State income tax |
$348 |
Taxable income |
$5,452 |
Jacob received a $22 state income tax refund in 2023 on his 2022 state return. He should report it as income on his 2023 tax return.