captaintek3304
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I don't know if it's like that in all states, but in MA, when we get refunds, we get a 1099-G the next year to add it to our taxable income.Wait, the states treat your prior year state refund as taxable income? What theis that? We dont have state tax here so I dont know how it works but would have thought it would have the same rule as a federal refund. Its money they owe you because you overpaid, not income.
Unless your just trying to be funny. Then you can ignore this post.
It makes perfect sense if you think about it. That was money you weren't taxed on, you received it as a payment, so you owe taxes on it.
I think it's only if you itemize deductions on your return though.