12 Apr I got a tax refund. Will it be taxed as income?

Q. I did not reduce my 2020 estimated tax payments to adjust for the suspension of my Required Minimum Distribution (RMD). I filed my taxes and received a refund for the amount of the overpayment. Will that refund be taxed as income in 2021?
— Taxpayer

A. Nope. Those funds are safe from taxes.

A federal tax refund is your money that you overpaid to the government.

Therefore, as it is a return of your own funds, said Joseph Sarnecki, a certified financial planner with U.S. Financial Services in Fairfield.

A refund is not taxed as income, he said.

“Keep in mind, state income tax refunds may be taxable income for federal purposes for individuals who itemized their deductions on their federal tax return in the previous year,” he said. “This should be reviewed with your accountant.”

Also, the government has not issued a suspension on RMD amounts for 2021, so you should continue to pay your estimated payments if recommended by your accountant this year, he said.

Email your questions to .

This story was originally published on April 12, 2021.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.