The Finch Formerly Known As Gold

6 January 2006

It helps when the rules make sense

The Oklahoma Tax Commission has sent me a Form 1099-G, and I know why: I itemized deductions in 2004, and this means that the tax refund I received is considered income for 2005. Nothing startling about that.

However, something doesn't quite add up: the amount specified on 1099-G exceeds the amount of the refund — by an amount which happens to equal the amount I kicked in for use tax.

I have emailed the OTC with a query, and also asked why they didn't bother to include the $45 rebate that popped up this fall. (Best guess here: they haven't gotten the records back from Bank of America, to whom they outsourced the sending of the actual rebate checks.)

Posted at 5:24 PM to Soonerland

Let me get this straight: You earned money last year, you paid taxes on it, you ended up overpaying, and when they give you the overpayment back, they consider it new income and make you pay tax on it again? Tell me I got something wrong here. Isn't there something in the constitution that says the government can't tax the same dollar twice?

Posted by: Thomas Pfau at 6:26 PM on 6 January 2006

Different governments. (I'm sure if the city or county had an income tax, they'd figure some way to work that into the scheme as well.)

But this has been the law as far back as I can remember, which would be 1975, when I studied under R. Block. (Brother H. Block was busy doing TV commercials.) You deduct your state tax on your Federal return in year 1, and if it should turn out that you overpaid said state tax, you even the score in year 2. (Note that if you don't itemize deductions, this does not apply.)

Residents of states which impose no income tax should feel free to gloat — although I'm sure they're getting the gelt from you somehow.

Posted by: CGHill at 6:43 PM on 6 January 2006

Oh, so your overpayment at state level was counted in your deduction at federal level so when adjusted, you had to move it to the income column and pay tax on it. That sounds a bit more logical but I'm surprised they aren't hitting you with a penalty for late payment, too!

Posted by: Thomas Pfau at 7:59 PM on 6 January 2006

Uh, no. Because they have had that money which was withheld the entire time. So no late payment applies.

Posted by: ms7168 at 8:23 AM on 7 January 2006

Since when has reason or common sense ever stopped a minor functionary on a powertrip from doing something that shouldn't have been done?

Posted by: unimpressed at 8:53 AM on 7 January 2006

Well, the OTC does answer its mail:

In response to your e-mail, the money used to pay your Use tax is money that would have been refunded to you, therefore, it is considered part of your refund and reported on your 1099-G.

I guess they're splitting the difference. I'll let it go at that, but it still sounds weird to me.

Posted by: CGHill at 5:12 PM on 9 January 2006