Line 10: Taxable Refunds, Credits, or Offsets of State and Local Income Taxes
None of your refund is taxable if, in the year you paid the tax, you either (a) did not itemize deduction, or (b) elected to deduct state and local general sales taxes instead of state and local income taxes.
If you received a refund, credit, or offset of state or local income taxes in the year, you may receive a Form 1099-G. If you chose to apply part or all of the refund to your estimated state or local income tax, the amount applied is treated as received in that year. If the refund was for a tax you paid in the previous year and you deducted state and local income taxes on line 5 of your Schedule A, use the worksheet located on page 21 of Form 1040 Instructions. (OLT will figure this amount for you based on your inputs.)
Exception: See pulication 525 at the IRS website.
- You received a state refund that is for a tax year other than last year.
- You received a refund other than an income tax refund, such as a general sales tax or real property tax refund of an amount deducted or credit claimed in an earlier year.
- The amount on your last year Form 1040, line 42, was more than the amount on line 41.