Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I make estimated payments to the state and last year made a payment in January for 1993 taxes. Then I credited my 1993 state tax refund toward 1994 payments, and that got me through two quarters. I sent a check in September for the third payment and one in January 1995 for the fourth. Which payments can I claim on my 1994 U.S. return? Also how do I figure out how much of my 1993 state refund is taxable? We are subject to the 3 percent itemized deduction reduction.

A: Individuals who itemize their deductions can deduct the state taxes paid during 1994 on Schedule A. This includes the 1993 estimated payments, or taxes due with returns, that were paid in 1994. In addition, the 1993 state tax overpayments applied to 1994 should be deducted on the 1994 Schedule A. To calculate " the taxability of state tax refunds, complete the worksheet included in the instructions to Form 1040. Since you were subject to the 3 percent reduction on itemized deductions, you should refer to IRS Publication 525 to determine what portion of your refund must be included on your 1994 federal return. State tax refunds are not taxable if you did not itemize in the year the taxes were paid, nor are they taxed by Maryland.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear a tax tip.

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