Why do I have to report previous years tax refund as income?
Dear R: You only have to report the state refund if you itemized last year (Sch. A). On Sch A last year you were able to deduct your state tax paid from your W2. Then if you get a refund of some of that money, you will declare that refund the next year-just making the books right. It’s not double taxation. This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent Master Tax Advisor.
