Tax refund from NJ and paid taxes to CA in 2005 do I still have to report the NJ tax refund?

Question

I was a non-resident in CA and resident of NJ for 2005. I got a Tax refund of 1200 from NJ and paid additional taxes of 1800 to CA in 2005 do I still have to report the NJ tax refund for my 2006 Federal return on Line 10 "Taxable Refunds, Credits, or Offsets of State and Local Income Taxes" I got Form 1099-G from NJ but nothing from CA. Please advice.

BTW - I did itemize my deductions for 2005

Answer 1

Since you itemized and deducted state taxes last year, you may owe tax on the NJ refund. If you use a software package, it will figure the taxable recovery based on your prior year itemized deductions.

At the same time, you can deduct the $1,800 taxes paid to California in 2006. California would not send you any form to document your taxes paid.

Answer 2

If you took a deduction in 2005 on schedule A for the NJ taxes, then yes, you have to report the refund as income on your 2006 tax return.

Answer 3

If you itemized your deductions on Schedule A in 2005 and reported taxes paid to NJ, then you would pick up this tax refund as income on your federal return only in 2006.

If you paid CA taxes in 2006 that were due on your 2005 tax return, you would report this on Schedule A for taxes paid in 2006.

Answer 4

If you itemized your deductions for 2005 and took a deduction for State Income Taxes paid on your Federal Income Tax Return, you must claim the NJ refund as income on your 2006 Federal Income Tax Return.

If you did NOT itemize on your 2005 Federal Income Tax Return, you do NOT claim the tax refund as income on your 2006 Federal Income Tax Return.

Answer 5

you must claim for NJ