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State and Local Income Tax Refund Worksheet—Line 10 Keep for Your Records Form 1040—Lines 9b Through 10 2008 and you deducted state and local in- Example 3. You bought 10,000 shares that applies. See the instructions for line 44 come taxes on line 5 of your 2008 Schedule that begin on page 37 for details. of ABC Mutual Fund common stock on A, use the worksheet below to see if any of July 9, 2009. ABC Mutual Fund paid a cash your refund is taxable. dividend of 10 cents a share. The ex-divi- dend date was July 17, 2009. The ABC Exception. See Itemized Deduction Re- Line 10 Mutual Fund advises you that the portion of coveries in Pub. 525 instead of using the the dividend eligible to be treated as quali- Taxable Refunds, Credits, or worksheet below if any of the following fied dividends equals 2 cents per share. applies. Offsets of State and Local Your Form 1099-DIV from ABC Mutual 1. You received a refund in 2009 that is Income Taxes Fund shows total ordinary dividends of for a tax year other than 2008. $1,000 and qualified dividends of $200. None of your refund is taxable 2. You received a refund other than an if, in the year you paid the tax, However, you sold the 10,000 shares on income tax refund, such as a general sales you either (a) did not itemize August 12, 2009. You have no qualified tax or real property tax refund, in 2009 of TIP deductions, or (b) elected to de- dividends from ABC Mutual Fund because an amount deducted or credit claimed in an duct state and local general sales taxes in- you held the ABC Mutual Fund stock for earlier year. stead of state and local income taxes. less than 61 days. 3. The amount on your 2008 Form 1040, line 42, was more than the amount on your If you received a refund, credit, or offset Be sure you use the Qualified 2008 Form 1040, line 41. of state or local income taxes in 2009, you Dividends and Capital Gain may receive a Form 1099-G. If you chose 4. Your 2008 state and local income tax Tax Worksheet or the to apply part or all of the refund to your refund is more than your 2008 state and TIP Schedule D Tax Worksheet, 2009 estimated state or local income tax, local income tax deduction minus the whichever applies, to figure your tax. Your the amount applied is treated as received in amount you could have deducted as your 2009. If the refund was for a tax you paid in tax may be less if you use the worksheet 2008 state and local general sales taxes. Before you begin:  Be sure you have read the Exception above to see if you can use this worksheet instead of Pub. 525 to figure if any of your refund is taxable. 1. Enter the income tax refund from Form(s) 1099-G (or similar statement). But do not enter more than the amount of your state and local income taxes shown on your 2008 Schedule A, line 5 . . . . . . . . . . . 1. 2. Enter your total allowable itemized deductions from your 2008 Schedule A, line 29 . . . . 2. Note. If the filing status on your 2008 Form 1040 was married filing separately and your spouse itemized deductions in 2008, skip lines 3 through 9, enter the amount from line 2 on line 10, and go to line 11. 3. Enter the amount shown below for the filing status claimed on your 2008 Form 1040. • Single or married filing separately—$5,450 } • Married filing jointly or qualifying widow(er)—$10,900 • Head of household—$8,000 3. 4. Did you fill in line 39a on your 2008 Form 1040? No. Enter -0-. } Yes. Multiply the number in the box on line 39a of your 2008 Form 1040 by $1,050 ($1,350 if your 2008 filing status was single or head of household). 4. 5. Enter any state or local real estate taxes shown on your 2008 Schedule A, line 6. Do not include foreign real estate taxes . . . . . . . . . . . . . . . . . . . . 5. 6. Enter $500 ($1,000 if married filing jointly) . . . . . . . . . . . . . . . . . . . . . . 6. 7. Enter the smaller of line 5 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7. 8. Enter any net disaster loss from your 2008 Form 4684, line 18a . . . . . . . 8. 9. Add lines 3, 4, 7, and 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. 10. Is the amount on line 9 less than the amount on line 2? No. STOP None of your refund is taxable. Yes. Subtract line 9 from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. 11. Taxable part of your refund. Enter the smaller of line 1 or line 10 here and on Form 1040, line 10 . . 11. - 23 - Need more information or forms? See page 96.