Have a client who lives in Oregon. He received a 1099G from the state for his state refund. It includes a "kicker" refund based on the tax (line 29) times 0.1860 percent. According to the website instructions, this would be income if the tp itemized the deductions. He did not receive any tax benefit from this $3900 in the prior year (like state withholding tax). I feel that he should not have to report it as income - is this correct? Any Oregonians out there?
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Kicker
It can be taxable, following the same rules as any other refund.
Say the withholding last year was $3900 and she received a refund of $100. Also say the $3900 was deducted on schedule A and schedule A was not limited, no AMT.
The kicker is an additional refund of tax, so it is part of that $3900 that was withheld and she did receive a tax benefit.
Hope that helps -
I have to agree with Abby. It sounds like it is just an additional refund. Since the refunded amount was deducted from Federal income for 2006 (if itemized) it should be added back as income for 2007. Also, another way to "look" at it is the kicker is an "interest" income or "dividend" income. It's money that was "earned" in 2007 and should be included in income. Hope that helps.Comment
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treat it the same
as any state tax refund. It is an additional refund of 2006 state taxe.Comment
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