[net.taxes] 1099G & State Tax Refunds Discussion

wmartin@brl-vgr.ARPA (Will Martin ) (03/12/84)

I had submitted this earlier, when the 1099G inquiry first came out, but
the postnews software on this host wasn't working -- things posted locally
never were distributed. So here it is, a bit late to the world...

I believe that the reason for being instructed to report (if itemizing
deductions) the amount of state tax PAID as opposed to the amount 
actually OWED, is the situation in some states, as it is here in Missouri --
you have to do your Federal taxes FIRST, in order to transfer certain
amounts from specific Federal tax-form lines to your Missouri state tax
return.  This comes AFTER you have computed your itemized deduction.

Therefore, you don't know what state tax you actually owed at the time you
figure your Federal taxes. Of course, you could re-do your Federal return
AFTER you figure both it and the state, but that then changes your state 
return, which changes the amount you owe, which causes you to re-figure
again, which changes the amount, etc., etc., etc. -- an endless circle,
at least until the differences get below a dollar (or a cent, depending
on how accurately you figure your taxes...).

So it is much simpler for all concerned to just report the amount paid,
which is verifiable from the W-2, and figure the difference on the following
year's return, as is now done.

Now that I think of it, I got a state tax refund (Missouri) last year,
but I have never received a 1099G -- are states REQUIRED to send out this
form? (I never itemized deductions -- maybe you only get one if you both
itemized and got a refund?)

Will Martin

john@hp-pcd.UUCP (03/18/84)

I used to work with an engineer who figured his taxes just that way.If he ever
gets audited I dont't know who I'd feel sorrier or , him or the IRS.

It makes sense to count tax refunds as income. Otherwise you could make a
large overpayment on your state estimated taxes in Dec, deduct it from your
fed in Jan, and get a state refund in Mar. Theres no such thing...

BTW most of the tax guides that I have seen are great if your a business or
self employed, but what if you work for someone else? I know that I can deduct
books and magazines that pertain to my profession but what about calculators
or larger computers that I buy to keep current in my field. Are there any good
guides in this area?

John Eaton

!hplabs!hp-pcd!john