Accounting question re tax refund

Jason Ahrens jason at cougarcorp.net
Fri May 23 09:23:49 EDT 2008


I guess I understand now some... I come from a country where the two 
levels are somewhat tighter integrated taxwise so it just seems to work 
much more smoothly.

Ronal B Morse said the following on 22/05/2008 2:33 PM:
> It's not really underhanded at all. You get to deduct the 
> amount of the income tax you paid to the state when you 
> determine your federal tax liability. If your state or 
> local tax liability is less than the amount that was either 
> witheld or prepaid, hence the refund, it means the basis of 
> your taxable federal income should have been that much 
> higher.  
>
> It's a matter of convenience that the state refund is 
> considered income in the year it was received, so you don't 
> have to go back and rejigger the books or file amended tax 
> returns for the year the tax payment was originally made. 
>
> Ron Morse
>   



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