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Posted by L K Williams on April 15, 2006, 2:08 am
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> Herb Smith wrote:
>> As long as the $16K was not used on your 2004 return to gain
>> a tax benefit, receipt of the refund is not taxable income.
>> Ignore it.
> That's what we decided to do, but since the state of MD has reported
> this as arefund to the IRS, I figure that an audit is a certainty. We
> were hoping to avoid that.
Leaving this off your return is not an invitation to IRS to
take a look at your return. For one thing, they don't have
the manpower to look at every return like this. Thousands
of taxpayers don't itemize but still ger state tax refunds.
If IRS had to look at all of these, they wouldn't have time
to check anything else.
Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
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