Who reports state refund?

[Luis Mopeo]

2005 joint return, he had all income and all state tax paid on Schedule A. She had no income. Now getting divorced.

2006 return, MFS. Their joint return had a state refund of $9,000 last year, received in 06. How is that taxable state refund allocated on their MFS returns this year?

Ugly divorce. Any citations would be appreciated.

[Jesse]

If a community property state it should be split 50/50.

[Luis Mopeo]

If a community property state it should be split 50/50.

Not community property.

[Chief]

Joint refund

I had a similar situation but first died and client married again in 2005. What an experience in tax preparation and human relations. But now to your question I would split the refund and claim it on each return. You probably will lose one of your clients in the future. I wouldnt lose any sleep over it.

[Bees Knees]

Give it to the one who got the money. If they both got it, they both split the income.

[dyne]

Years ago I researched this question and found that each is to report HALF
of the state tax refund.

[Bees Knees]

Louie wanted a cite.

IRS Pub 525, page 20, "If you received a state or local income tax refund...you generally must include it in income if you deducted the tax in an earlier year...."

Note it says, "if you received a refund..."

I stand by my earlier statement. It goes to the one who received it. Half to each of both received it.

[ChEAr$]

However the word "you"

Louie wanted a cite.

IRS Pub 525, page 20, "If you received a state or local income tax refund...you generally must include it in income if you deducted the tax in an earlier year...."

Note it says, "if you received a refund..."

I stand by my earlier statement. It goes to the one who received it. Half to each of both received it.

in this case refers to a joint return, meaning one taxpayer only. So even though I
would allocate refund on basis of percentage of income each had on the joint return,
IRS says half and half.