Former Starbucks Prez Says: Don't Gut Estate Tax

[Ban Hammer 14,655]

The fact is that Kansas does not tax any refunds. What you pointed out was a subraction from the portion of federal AGI that the state taxes.

The only time the IRS taxes a state or local refund is when, in the previous year, the taxpayer claimed the amount of tax paid as a deduction on their schedule A and recieved a portion of it back in the form of a refund. It's really recapturing a deduction from the previous year. On the other hand, if you have to pay the state more taxes, that is deducted on the tax return.

ah i think i see the problem here. you're thinking that i claim the state refund as additional income on the federal taxes, which i don't. but it is counted by the state of kansas......

[clloyd 0]

Ok, that I do not understand.

[clloyd 0]

Please point out on what line the refund is counted as income.

[desert_fox 32]

Please point out on what line the refund is counted as income.

He is talking about his federal income tax return.....refunds from state income taxes are taxable.

2005...

income 50,000

state income tax deducted 3000

-------

taxable income 47,000

later I receive a refund of $300 for overpayment of my state income tax (of course it will be in the following year when you file taxes that you receive the refund)

2006

income 50,000

refund 300

taxable income 50,300

state tax withheld 3,000

taxable income 47,300

rocket science???

[clloyd 0]

Please point out on what line the refund is counted as income.

He is talking about his federal income tax return.....refunds from state income taxes are taxable.

2005...

income 50,000

state income tax deducted 3000

-------

taxable income 47,000

later I receive a refund of $300 for overpayment of my state income tax (of course it will be in the following year when you file taxes that you receive the refund)

2006

income 50,000

refund 300

taxable income 50,300

state tax withheld 3,000

taxable income 47,300

rocket science???

No, he's not, please actually read what he wrote. And he is not talking about a federal return.

[ChristinaM 0]

Interesting when taken with the article InCanada posted today about the sense of American entitlement. Essentially, the Estate Tax attempts (in a somewhat crude way) to level the playing field and create a meritocracy. How does a meritocracy work when everyone feels that everything they do has merit?

A little bit of a tangent, sorry.

[Mr. Big Dog 10,747]

Please point out on what line the refund is counted as income.

He is talking about his federal income tax return.....refunds from state income taxes are taxable.

I suggested that earlier and charles explicitly rejected that notion. Charles is, in fact, claiming that Kansas will count as income it's own refunds. Wouldn't make me wonder, really, seeing that Kansas also sells ID as science...

[Ban Hammer 14,655]

Please point out on what line the refund is counted as income.

He is talking about his federal income tax return.....refunds from state income taxes are taxable.

I suggested that earlier and charles explicitly rejected that notion. Charles is, in fact, claiming that Kansas will count as income it's own refunds. Wouldn't make me wonder, really, seeing that Kansas also sells ID as science...

pm me tomorrow and remind about this, my last 3 years of tax returns are at work and i'll provide you the exact name of the form and line such goes on. and it ain't my fault that kansas does this, they love to tax everything here.

[Ban Hammer 14,655]

Please point out on what line the refund is counted as income.

He is talking about his federal income tax return.....refunds from state income taxes are taxable.

I suggested that earlier and charles explicitly rejected that notion. Charles is, in fact, claiming that Kansas will count as income it's own refunds. Wouldn't make me wonder, really, seeing that Kansas also sells ID as science...

pm me tomorrow and remind about this, my last 3 years of tax returns are at work and i'll provide you the exact name of the form and line such goes on. and it ain't my fault that kansas does this, they love to tax everything here.

ah here we are. form 1040, line 10 - taxable refunds, credits, or offsets and local income taxes. it gets subtracted out on the supplemental schedule for federal taxes but remains for state taxes, thus increasing one's state income taxes owed.

everyone fully informed now?

[desert_fox 32]

Once again...a state income tax refund will be taxable on your federal return in the following year because you received a refund on something that you listed previously as a deduction against your income.

It would never be taxable on your state return as you settled with them when you filed your return. They either sent you a refund of the excess payments or they sent you a bill because you didnt withhold enough.

If they sent you a refund, its taxable on your federal return, if you had to pay more, then you have an additional deduction to take when you file your federal return for the following year.

Income and decductions are declared for the year for the actually year in which they were paid or received.

If this is too dificult to unerstand, then file using TURBOTAX or pay the 200 for the clerical assistance from HR Block.

Maybe I should have been a tax attorney.

[Ban Hammer 14,655]

Once again...a state income tax refund will be taxable on your federal return in the following year because you received a refund on something that you listed previously as a deduction against your income.

It would never be taxable on your state return as you settled with them when you filed your return. They either sent you a refund of the excess payments or they sent you a bill because you didnt withhold enough.

If they sent you a refund, its taxable on your federal return, if you had to pay more, then you have an additional deduction to take when you file your federal return for the following year.

Income and decductions are declared for the year for the actually year in which they were paid or received.

If this is too dificult to unerstand, then file using TURBOTAX or pay the 200 for the clerical assistance from HR Block.

Maybe I should have been a tax attorney.

what was listed on my taxes as a deduction was the actual tax i paid, not the overage. both get done at the same time. and for some reason kansas taxes their own refund.

my taxes are done on base by the legal people, along with everyone else. so i doubt they do it wrong.

[one...two...tree 2,762]

Interesting when taken with the article InCanada posted today about the sense of American entitlement. Essentially, the Estate Tax attempts (in a somewhat crude way) to level the playing field and create a meritocracy. How does a meritocracy work when everyone feels that everything they do has merit?

A little bit of a tangent, sorry.

Interesting point.

[desert_fox 32]

Kansas does not and would not tax a refund from their own state as stated by clloyd.

you are confusing state income tax with federal income tax,

You wilthheld 1500 from your income to pay your Kansas income tax. You filed a Kansas return. After filing you see that you over withheld. You file your return, Kansas sends you a 300 dollar refund. You are done with Kansas...no more issues with Kansas this year.

Now you have an income that you previously claimed as part of a deduction on you federal return. You owe the US govt the marginal tax on the 300 that you received and for the year in which you received it.

[Ban Hammer 14,655]

Kansas does not and would not tax a refund from their own state as stated by clloyd.

you are confusing state income tax with federal income tax,

You wilthheld 1500 from your income to pay your Kansas income tax. You filed a Kansas return. After filing you see that you over withheld. You file your return, Kansas sends you a 300 dollar refund. You are done with Kansas...no more issues with Kansas this year.

Now you have an income that you previously claimed as part of a deduction on you federal return. You owe the US govt the marginal tax on the 300 that you received and for the year in which you received it.

you're missing it....

it's not that i withhold too much i overpay! hence the refund.

and sure as the sun rises early every year kansas sends me a form 1099-g with the same amount i was refunded the year before

[desert_fox 32]

Kansas does not and would not tax a refund from their own state as stated by clloyd.

you are confusing state income tax with federal income tax,

You wilthheld 1500 from your income to pay your Kansas income tax. You filed a Kansas return. After filing you see that you over withheld. You file your return, Kansas sends you a 300 dollar refund. You are done with Kansas...no more issues with Kansas this year.

Now you have an income that you previously claimed as part of a deduction on you federal return. You owe the US govt the marginal tax on the 300 that you received and for the year in which you received it.

you're missing it....

it's not that i withhold too much i overpay! hence the refund.

and sure as the sun rises early every year kansas sends me a form 1099-g with the same amount i was refunded the year before

I am missing nothing.

That 1099 is for you to use to file your Federal income tax as the source data to support the taxable incomes on your Fed return....it states the source of your income...it has nothing to so with the state of Kansas...they only issued it, but is not used in any way further with the state of Kansas.

Edited August 11, 2006 by desert_fox