Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Wages, Interest, etc. Workout

State and Local Refunds and Alimony

Skills Warm Up: State and Local Refunds

Question 1 of 1

Sharon claimed the standard deduction on last year's tax return and received a state tax refund. Is the refund taxable and, if so, how does Sharon report it?

A No, the refund is not taxable
B Yes, she should enter the total amount on Form 1040 as income
C Yes, she should enter the total amount on Form 1040 capital gains line
D Yes, she must use the appropriate worksheet to determine the amount to enter as income


Form 1099-G, Certain Government Payments
State and Local Income Tax Refund Worksheet - Line 10
Publication 4012 Taxable State Refunds

Form 1099-G, Certain Government Payments

State and Local Income Tax Refund Worksheet - Line 10

Publication 4012 Taxable State Refunds