Exercise $10-17($Algorithmic$)($LO$.4)$

Pierre, a cash basis, unmarried taxpayer, had $$2,960$ of state income tax withheld during $2022.$ Also in $2022,$ Pierre paid $$740$ that was due when he filed his $2021$ state income tax return and made estimated payments of $$2,072$ towards his $2022$ state income tax liability. When Pierre files his $2022$ Federal income tax return in April $2023,$ he elects to itemize deductions, which amount to $$13,450,$ including the state income tax payments and withholdings, all of which reduce his taxable income.

a$.$ What is Pierre's $2022$ state income tax deduction?

$($This is correct$)$

$5,772$

b$.$ As a result of overpaying his $2022$ state income tax, Pierre receives a refund of $$1,184$ early in $2023.$ The standard deduction for single taxpayers for $2022$ was $$12,950.$ How much of the $$1,184$ will Pierre include in his $2023$ gross income?

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Cash basis taxpayers deduct state income taxes in the year paid regardless of the year to which the payment relates.