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Year of 2014 Refund Taxable?

January 26, 2017 • Jesus Mejia • Log In to Post Comments

Good morning,

Client walked in with 2(two) 2016 1099-G' s one for the year 2015 with is correct and one for the year 2014.

The FTB states that the 2014 return was filed in Oct 2015 (with valid Extension) but was not processed until 2016 because it was paper filed. I asked for help to have 2014 year corrected she said NO.

How is it possible to have your 2014 FTB refund, filed in 2015 taxable in the year 2016. By the way that 2014 refund was reported on the 2015 1040.

Your input will be greatly appreciated.


As a cash basis taxpayer if their 2014 and 2015 CA tax refunds were both issued to them in 2016 then both the 2014 and 2015 CA tax refunds would be included on their 2016 federal tax return (assuming they weren't in the federal AMT in both 2014 & 2015 and itemized deductions and took a state income tax deduction in each tax years' Schedule A).

As such the 2015 federal tax return that reported the 2014 CA tax refund was incorrect and could be amended if necessary since the CA tax refund wasn't issued until 2016.

Dear Ben L.

I understand your answer but I need to give you more facts.

The 2014 Tax return was filed on Oct 15, 2015. The overpayment was elected to be carried over to 2015. There was no refund received by the client (both years overpayments were carried over). The FTB stated that the return for 2014 was processed in Jan 2016 and the 2015 overpayment was processed in late 2016. The 2014 return was mail and received by the FTB in 2015. The fact that it was processed in 2016 is irrelevant - unless I have really missed something hear. If I have, help me out.

If  would like to discuss this if you wish. My # 626-369-8787. 

Jesus -  I heard back from the FTB on my matter which was similar to yours. The FTB is aware of the issue.  They are going to correct 1099-G's on a case by case basis.  We will need to call the FTB to have the 1099's.  Unless we alert them to specific taxpayer accounts, they are not undertaking any steps to correct the 1099-G's.

We tried to get the FTB to do an automatic fix across the board, at least for the people  whose refunds were applied to estimated tax but they say they can't fix it automatically. We aren't sure we believe this and are still pressing for a better resolution.


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