In 2020, clark filed form 1040 for the 2019 taxable year. clark did not itemize his deductions. in 2020, clark received a state income tax refund of $900 plus interest of $10 for overpayment of 2019 state income tax. what amount of the state tax refund and interest is taxable in clark's 2020 federal income tax return?
a. $0
b. $10
c. $900
d. $910

correct option is  B. $10

Explanation:

given data

state income tax refund = $900

interest over payment  = $10

solution

we know that Federal and the state income tax refund is an excluded from  taxpayer taxable income to  extent

so that here refund will not reduces  amount of tax for given earlier year

so here amount of  state tax refund and the interest is taxable in Clark 2020 federal income tax return is $10

so here correct option is  B. $10

month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23