An unmarried taxpayer itemized deductions of $6,650 in 2013, which included $3,700 of state income tax withheld. In 2014, the taxpayer received an $800 state tax refund. According to the tax benefit rule, the taxpayer must include $550 of the refund in gross income for 2014, as the taxpayer received a $550 tax benefit in 2013 from itemizing deductions over the standard deduction amount.

1. An unmarried taxpayer itemized deductions in 2013. The taxpayer's itemized deductions were
$6,650; the standard deduction amount was $6,100. Included in the taxpayer's itemized
deductions were $3,700 of state income tax withheld. In 2014, the taxpayer receives an $800
refund check from the state government. What amount must the taxpayer include in gross
income in 2014?
Solution
Answer : $ 550
According to the tax benefit rule, received a $550 tax benefit.
$6,650 itemized deductions less $6100 standard deduction.
the refund is not taxable