State refund "kicker" treatment on Federal Return

[schildi]

Hi All!

I hope somebody here can help me with this question:

I am living in Oregon, and I am puzzled on how to correctly enter the state income tax "kicker" from last years return (2017).

I did receive a form 1099G showing the kicker amount.

Here is the full scenario:

For 2017, $12,000 has been deducted from my paycheck for state income taxes. That's the number ($12K) that I claimed on the 2017 return (itemized deduction).

For the state return, the kicker (some sort of refund due to the state having collected too much?) amount turned out to be $700. That $700 was added to my credits for a total of $12,700 (=12,000+700). The tax table showed that my total state income tax is $12,400 based on income and Federal return.

So basically, if there would not have been the kicker, I would have owed $400 (=12,400-12,000), but with the kicker I basically got $300 (=12,700-12,400) back.

Now, fast forward to this year. I got a form 1099G showing the $700 kicker, but not the $300 refund.

What number goes on line 10 of schedule 1?

(a) $300  (the refund I got)

(b) $700  (the kicker amount) or

(c) $1,000 (kicker + refund)

Which is the correct number?

I have the bad feeling that it's (c), even though I think it should be (a), because the total state income tax that I ended up paying in 2017 is $11,700 (=12,000-300 refund), and $12K has been reported on the 2017 return, so bottom line I got $300 back.

Turbo Tax has btw used (b), but I somehow don't trust that.

If somebody could help me out here, I would really appreciate it!

Thanks a lot in advance!

[gacpa]

I think $700 is the right answer.  If you itemize on your federal return, you get a deduction for total state income taxes paid ( or you used to) and then if you get a refund of state taxes, it is income to you in the next year because you got a federal deduction for the whole amount paid ($12,700).  Turbotax should have brought forward the $700 into 2018 as income on the federal return.

[rangerj]

The state treated you $700 as a deposit or estimated payment so you did receive a "refund" of $700. Currently $400 is used for you current state tax and the excess $300 refunded. The taxable amount would be the $700 BUT, The "Tax Benefit Doctrine" may apply. The $700 is taxable "to the extent" you received a tax benefit. A good tax program will calculate this for you.

[Sharon]

My accountant put the kicker on line 10 under Taxable refunds, credits, or offsets of state and local income taxes.

The kicker is a uniquely Oregon thing.  It "kicks in" when the state revenue exceeds projections by at least 2%.  The excess is then refunded back to taxpayers as a credit on your taxes.  For a while it was returned via an extra check, usually just before Christmas.

[schildi]

Thanks a lot for your responses, Sharon, rangerj & gacpa.

It looks like you all agree that I should enter the $700 kicker amount only as it looks like.

I am not 100% sure I understand why the $300 refund would not have to be added as well, is it because the $400 minus $300 = $100 would be added to state income taxes for 2018? If that's the case, then that would make sense.

Again, thanks a lot for the feedback!