Do you have to pay taxes on the previous years refund?

Question

My boyfriend was recently told he had to pay taxes on last years return. Is this true?

Answer 1

If your boyfriend itemized his deductions on his prior year tax return and claimed his state taxes as a deduction, and then he recieved a refund, he would have to claim the refund on this years taxes. If he took the standard deduction he would not have to claim the refund as income this year.
For more information call 1-800-829-1040

Answer 2

Not on a federal refund. But if you received money back for a state or local return last year, and you itemized and took the whole amount you paid in as an itemized deduction, then you pay tax this year on what was refunded last year but you had deducted.

If you didn't itemize the previous year, you don't have to worry about it.

Answer 3

If you did not itemize your deductions on your Federal tax return for the same year that the state or local tax refund applies to, do not report any of the refund as income.

If you received a refund of state or local income taxes this year that you took an itemized deduction for in an earlier year, you may have to include all or part of the refund as income on your tax return. The Form 1040 instructions for the state and local tax refund line provide you with a worksheet to calculate the amount of your refund that is taxable. There is a more detailed worksheet called Itemized Deduction Recoveries in Publication 525, Taxable and Nontaxable Income. Report your taxable State or Local Refunds on Form 1040 (PDF). You cannot use Form 1040A (PDF) or Form 1040EZ (PDF). Refer to Tax Topic 405, Refund of State and Local Taxes, and Publication 525, Taxable and Nontaxable Income, for further information.

Answer 4

Only if you itemize deductions, and only with tax refunds that you claimed last year as a deduction.

You're not really paying taxes on it, you're giving your deduction back.

(It's actually illegal for one government entity to tax another, that's why federal bonds are deductible on state returns and state and municipal bonds are deductible on federal. So any money you get directly from the state can't be touched by the IRS, and the only way you can ever pay on it is to first claim it as a deductible tax. Notice that you'll never have to do this with sales tax--because you never get sales tax refunded back to you.)

Answer 5

Is the refund from his Federal return, or from his state return.

If it's from the Federal return, it is not considered income for any purpose, so no tax would be due.

If it's from the state return, it may be considered income, especially if he itemized his deductions last year. If he didn't itemize, there is no income.

Answer 6

He does not have to claim his federal refund. However if he Itimized last year and he is Itimizing this year then he has to claim his 2005 State Refund on his 2006 Federal Return.

Answer 7

Shouldn't be. If you get a tax REFUND it's because TOO MUCH MONEY was taken out for your taxes from the previous year, and the government owes it back to you. It's a TAX REFUND, it does not constitute INCOME, so you don't have to tax it.

Answer 8

No, that would completely defeat the purpose of filing and receiving a refund on overpaid taxes! Unless, of course, he owed taxes last year and did not pay them. Then, yes, there is fine.

Answer 9

USA, Federal refund if you itemized, no.

NY State refund, yes. Your state may be different.

Answer 10

No.