in GA, do we need to pay federal taxes on the $5000 credit

Hello members...

So I claimed the $5000 state credit for Leaf when I filed my 2013 taxes few weeks back. Am I right in assuming that this $5000 will be reported in my 1099G (state tax refund / credit) and hence I need to pay federal taxes on it when I file for year 2014?

A tax consultant also seems to have told one of my friends the same...

Thanks

I don't know about Georgia in particular...But in Oregon, if the tax credit you claimed on state income tax resulted in an income tax refund from the state, then yes, you will have to pay 2014 federal income tax on the refunded amount only. That is to say, if the $5000 tax credit resulted in a $2500 refund (because you still owed some state tax), then you only would have to pay fed income tax on that $2500 for 2014. Likewise (and I don't know if this is the case in GA, or not), if it's a fully-refundable tax credit, and you were already getting a $1000 refund (so you ended up with $6000 total), then you would have to pay 2014 fed income tax on the whole $6000.

If you don't end up getting a state tax refund at all, then you will *likely* not owe any additional tax due to the tax credit. Like I said don't know the particulars of Georgia, but that's how it would work in OR.

--G

Yes, you will get a 2014 1099G in the amount of your total refund you received from Georgia. It's not so much taxing you on the $5,000 as it is reversing the deduction you took in 2013 for state and local income taxes. The 1099G may or may not be taxable depending on whether you itemized and took a deduction for state and local income taxes or not. If you just took the standard deduction, the 1099G will not be taxable.

I am not a tax professional, and you should consult one before filing your 2014 taxes.