wjm@whuxj.UUCP (MITCHELL) (02/29/84)
No, you are not being taxed twice when you report state income tax refunds as income, since you SUBTRACTED the tax you paid (which included the refund) from your income the previous year. When you report it the following year, you pay tax on it for the FIRST time. You do NOT report a state income tax refund as income if you did NOT deduct the tax the year before (e.g. you took the standard deduction. Bill Mitchell Bell Communications Research, Inc. Whippany, NJ (whuxj!wjm)
wjm@whuxj.UUCP (MITCHELL) (03/29/84)
As I've said before, there is NO double taxation when you have to report State income tax refunds as income in the following year. The reason you have to report them is that in the previous year you DEDUCTED the entire amount you paid the State folk (including the refund) from your income and therefore did NOT pay tax on it. In effect, you've deferred paying taxes on the refund for one year. Bill Mitchell Bell Communications Research, Inc. Whippany, NJ (whuxj!wjm)