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Matt, single, lives in Michigan and uses the cash method of accounting. In April of 20x7, he filed his 20x6 Michigan state tax return, and
Matt, single, lives in Michigan and uses the cash method of accounting. In April of 20x7, he filed his 20x6 Michigan state tax return, and had to pay in an additional $1,000 in 20x6 state income taxes. During 20x7, he had Michigan income tax withheld of $5,000. In April of 20x8, he filed his 20x7 Michigan tax return claiming a refund of $500, which he received in May of 20x8. If he has $20,000 in itemized deductions for 20x7: What should Matt take as his state income tax deduction on his 20x7 Federal income tax return (filed in April 20x8)? How should Matt treat the $500 refund in 20x8
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