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Exercise 5-26 (Algorithmic) (LO. 3) Apply the tax benefit rule to determine the amount of the state income tax refund included in gross income
Exercise 5-26 (Algorithmic) (LO. 3) Apply the tax benefit rule to determine the amount of the state income tax refund included in gross income in 2021. If an amount is zero, enter "0". a. Myrna and Geoffrey filed a joint tax return in 2020. Their AGI was $81,825, and itemized deductions were $29,800, which included $7,450 in state income tax and no other state or local taxes. In 2021, they received a $5,960 refund of the state income taxes that they paid in 2020. The standard deduction for married filing jointly in 2020 was $24,800. b. Veronica filed as a single taxpayer in 2020. Her AGI was $247,500, and itemized deductions were $47,400. Her local property taxes were $15,600 and her state income taxes were $17,900. In 2021, Veronica received a $3,300 refund of the state income taxes she paid in 2020. The standard deduction for single filers in 2020 was $12,400.
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