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View Full Version : Double Jeopardy On Taxes????



Jacob Hawkes
02-10-2011, 05:43 PM
How is this remotely legal? Taxing a previous year's state tax return? Didn't our founding fathers go to war against Britain over excessive taxes?

luvmylabs23139
02-10-2011, 05:57 PM
OK, here is how this works and it is not double taxation.
Year 1 IF you itemize your deductions you can write off all state income taxes witheld as if it were your actual state liability.
Now if you got a refund you did not actually pay as much in state income taxes as you wrote off. Therefore the next year you must claim the amount of your refund since technically you claimed too much as a deduction the year before.

If you did not claim your state income taxes but rather just took the standard deduction in year 1 you do not have to recapture the refund.

FICA on the other hand is double taxation although the gov't claims it is not since it is technically an insurance. I say this because you pay federal income tax on the amount witheld for FICA. Your federal taxable income is not reduced by the amount witheld for FICA

Jacob Hawkes
02-10-2011, 06:09 PM
Well exactly how does that work? I claim Single & 0 on both Fed and State taxes no matter what state I work in. Worked in Cali in 09 and of course paid a pile of money into the Federal, State, and City taxes. Obviously you'll never see those city taxes. Yes, I itemized my deductions but it wasn't claimed as a write off on state taxes, only Federal. If you over pay on state taxes (Out of state especially.) and you get a refund, you're saying they shouldn't be able to tax that refund based on the info I just gave?

luvmylabs23139
02-10-2011, 06:39 PM
Well exactly how does that work? I claim Single & 0 on both Fed and State taxes no matter what state I work in. Worked in Cali in 09 and of course paid a pile of money into the Federal, State, and City taxes. Obviously you'll never see those city taxes. Yes, I itemized my deductions but it wasn't claimed as a write off on state taxes, only Federal. If you over pay on state taxes (Out of state especially.) and you get a refund, you're saying they shouldn't be able to tax that refund based on the info I just gave?


OK, first of all what you fill out on a w-4 is simply for witholding purposes and does not necssarily reflect your actual federal tax filing status.

Now we are talking about federal taxes.
Since you itemized deductions last year, you most likely claimed a deduction for the full amount of state income taxes witheld that year as a deduction. Find your previous years federal return and verify this fact.
If this is the case you MUST claim the amount of your state income tax refund as income this year on your federal taxes. This is very important as the STATE has sent that information to the iRS and if you do not report that income you will trigger an IRS AUDIT.
If you lived in 2 states for 2010 you must files state returns in both states if they both have state income taxes.

BY the way if in any year you ended up paying the state additional money (more than was witheld) and had itemized you federal deductions, the following year you would be allowed to claim that additional amount as a deduction.

Jacob Hawkes
02-10-2011, 06:58 PM
I work in multiple states each year but Louisiana is the state I live in. I file taxes in each state that I work in that has state taxes. I have to find the return for last year to make sure about the Cali return. Anywho, I believe I have it figured out now. It's just that this is the 1st time I've ever heard of it. Thanks for explaining.