During 2011, Robert and Cassie had $2,600 withheld from their pay for state income taxes. They file a joint return for 2011 and claimed the $2,600 taxes withheld as an itemized deduction on their federal tax return. Their itemized deductions totaled $12,200 on their 2011 tax return. Their 2011 state income tax was only $1,000 and they received a refund of $1,600 when they filed their state income tax return in 2012. As a result, Robert and Cassie must
A) amend 2011's federal tax return.
B) report income of $600 in 2012.
C) report income of $1,600 in 2012.
D) reduce their deduction for state income taxes for 2012 by $1,600.
Answer: B
Tax
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