With 12 days left before the official conclusion of this tax filing season, we wanted to share some expert advice, in response to a question regarding the use of 1099-G forms. Information was generously provided by Chet Burgess, Executive Director Georgia Association of Enrolled Agents.
Q: I am a listener of the Ilyce Glink show on Newstalk 750 WSB and have a tax related question. Would appreciate if you could answer it.
I paid $2500 towards GA-SSO (2009) and got a refund in 2010. Now when preparing the federal taxes for 2010, how do I report this. Do I report the whole refund and pay taxes on it (since the 1099-g has the $2500 included in the refund received) or deduct the $2500 from it and report the balance, since it was supposed to be a dollar to dollar credit from the state. I itemized deductions last year.
A: Thank you for your generous support of education in Georgia.
If you itemized deductions in 2009 and received a refund of Georgia taxes paid during 2009, your refund is taxable to the extent that you received a federal tax benefit from the deduction of Georgia tax paid or withheld.
In general, if you did not pay Alternative Minimum Tax (AMT) in 2009, your Georgia refund is taxable income on your 2010 federal tax return. If you did pay AMT in 2009, your Georgia refund may not be taxable income, or may be only partly taxable on your 2010 federal tax return. Check your 2009 tax return for AMT to see if there is an mount entered on Page 2 of the Form 1040 on Line 45. If there is nothing on that line, your Georgia refund is taxable.
If there is an AMT amount on Line 45 of the 2009 return, you need to compute the taxable amount of the Georgia refund.
If you use tax software, be sure to perform the “rollover” or “proforma” operation to copy your tax file from the 2009 software over to the 2010 software. The software should perform the calculation of the taxable portion of the Georgia refund if you paid AMT in 2009.
If you are working your tax returns by hand, look in the IRS instruction book for the Form 1040 on Page 23 for a worksheet to compute the taxable portion of your 2009 refund.
What if I receive a credit but not a refund (the credit covered the amount I should have paid the state). if no refund do we still need to had the credit to next year taxable income?