Pay tax on your kicker -- even if you didn't get it!
The Oregon income tax "kicker" saga is generating new surprises by the hour. Now comes word that even those who didn't get their "kickers" are receiving notices (Form 1099-G's) from the state Department of Revenue showing that they received them! One reader so affected writes:
I also received a 1099-G, even though I was a paper filer who fell victim to TurboTax's error. I made my case to the DOR, and they said "no luck" because I paper-filed. If I had e-filed, they may have cut me a kicker check due to the TurboTax error. I still think it's very unfair to treat electronic and paper filers differently, although I see the DOR's point that I had a chance to review a printed return, whereas e-filers did not.Unlike the case of those who received their "kicker" checks late, in this case the state's issuing a 2007 1099-G form may be right. But it sets up an interesting dynamic for some people. If they itemized their deductions in 2006 and don't itemize them in 2007, they'll have to pay federal tax on their "kicker," even though they never got it. If you don't itemize in 2007, you won't get to deduct your charitable contribution of the "kicker," but if you itemized in 2006, generally speaking your "kicker" has to be reported as income for federal tax purposes.Anyway, back to the 1099-G, yes it lists the amount that my kicker SHOULD HAVE been as a state income tax refund. But I also have a letter from the DOR, which I received back when others were receiving their kicker checks, that states this amount can be considered a charitable contribution to the state school fund and is tax deductible. In that case, aren't they handling this correctly? That is, even though the tax refund never came, isn't it no different than if they cut me a kicker check then I turned right back around and donated the entire amount to charity?
What's the opposite of a loophole -- a black hole?
| Posted at 1:19 PM | Permalink |
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Comments (10)
But they did "get it" from the State of Oregon's perspective. It was credited to their tax I.D. and (per the taxpayer's direction) it was donated to a worthy charitable cause (the schools).
They simply need to list it as a charitable donation, right?
Posted by Mister Tee | February 8, 2008 5:09 PM
But, since technically, the money was donated in 2007, they should send the 1099G to everyone. It is just that some people have a letter stating that they donated the money in 2007, but it may get "undonated" and sent to them in 2008.
Posted by Mike | February 8, 2008 5:12 PM
Paying tax on the kicker is the civic equivalent of eating your own vomit.
Posted by Sam | February 8, 2008 6:27 PM
They simply need to list it as a charitable donation
If they don't itemize, they don't get to deduct charitable contributions.
Posted by Jack Bog | February 8, 2008 7:17 PM
Paying tax on the kicker is the civic equivalent of eating your own vomit.
I'm not too keen on this simile, but I think that collecting tax on a kicker is the equivalent of eating one's own vomit. The state hurled up the previously consumed taxes. Fortunately, the state kicker is not income for state purposes, and so this is not an issue.
Posted by Jack Bog | February 8, 2008 7:35 PM
I agree with Jack on the mixed simile.
Our mini-schnauzer approves. But she is also attracted to feline and goose feces, so i don't think she can be considered a judge of good tax policy or prose.
The State of Oregon is brining the wounds of those who "inadvertently" donated their kicker when they send them a 1099-G without first having explained how so many filers could have made (roughly) the same mistake. I'm not suggesting either the State or Intuit is at fault, but it seems like there must be some redress for some of the paper filers if ALL of the e-filers were offered a chance to revise and amend their returns.
I'm more annoyed by the idea that the State of Oregon can cap how much of our Federal Income tax is deductible...Paying tax on money the Feds already confiscated is just plain wrong. It is certainly more pervasive than the estate tax, and you can't solve the problem with more insurance.
Posted by Mister Tee | February 8, 2008 9:11 PM
"Fortunately, the state kicker is not income for state purposes, and so this is not an issue."
How about this then: the IRS collecting a tax on the Oregon kicker is like George Bush eating Ted Kulongoski's vomit?
You're welcome.
Posted by Sam | February 9, 2008 9:44 AM
If they don't itemize, they don't get to deduct charitable contributions.
True enough, but wouldn't you itemize unless the standard deduction is bigger than the aggregate of your deductible expenses? If so, then arguably you get the deduction either way.
Posted by Allan L. | February 9, 2008 10:49 AM
So Jack. Turbo Tax or Tax Cut?
Posted by Todd H. | February 9, 2008 11:42 AM
Boxers.
Posted by Jack Bog | February 11, 2008 1:15 AM