1

I just got married last year.

When I fill out my 1099G (filing jointly), after I take my state tax refund from 2017 am I allowed to subtract my wife's state tax payment from 2017? Or do I simply have to enter my own refund.

We both filed itemized returns last year in Illinois and were at the same marginal tax rate.

  • To be clear, the state fills out 1099G and sends it to you and the IRS; you use the information from 1099G in filling out (part of) your 1040 return. – dave_thompson_085 Jan 25 at 16:09
2

When I fill out my 1099G (filing jointly), after I take my state tax refund from 2017 am I allowed to subtract my wife's state tax payment from 2017?

No. A state tax refund you or your wife received in 2018 for 2017 taxes is taxable on your 2018 federal tax return to the extent you or your wife received a benefit from deducting it on your 2017 federal tax returns, without regard to any state tax payments you or your wife made in 2018.

State tax payments you or your wife made in 2018 are deductible (subject to the $10000 SALT cap) on your 2018 federal tax return if you are using itemized deductions on your 2018 federal tax return.

1

I am going to put in some numbers for the 2017 tax forms filed in April 2018.

  • Both filed tax forms in which they itemized.
  • Person A got a state tax refund of $234
  • Person B owed the state and paid the state of Illinois $42 in April 2018.

Now you are filing the tax forms due in April 2019. When determining the state tax payments for 2018 you include:

  • Person A's withholding during 2018
  • Person B's withholding during 2018
  • Person B's tax payment of $42.

When adding in the 1099-G from Illinois, the IRS Schedule 1 Line 10 worksheet will determine if some or all the $234 is taxable.

Don't edit the numbers on the 1099-G. Editing them may cause the IRS computers to flag your return becasue they couldn't match your numbers.

  • +1. I added a link to the worksheet you mentioned. – Ben Miller Jan 24 at 15:29
  • @mhoran_psprep: Assume that my situation is exactly as you describe in the example: the linked instructions for line 10 there seems to be no point in which person's B withholding makes any difference. I know by myself I would have to pay tax on the full amount. We were not married last year and had separate tax returns. The other answer to this question also points to a different conclusion, which is that person's B refund won't change anything. – rookie Jan 25 at 1:49
  • @rookie: user102008 said correctly the refund is taxed iff either of you got a benefit from deducting (itemizing) in the earlier year, which is exactly what the line 10 worksheet does; and you can deduct the withholding and payment subject to the SALT cap if you itemize -- but with the increased standard deduction fewer people will benefit from itemizing. Although worded differently there is no conflict between these. – dave_thompson_085 Jan 25 at 16:21

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