In oregon we have gotten a kicker refund. when there is too much money in the state coffers all tax payers get this kicker refund. The question i have is it says that we have to declare this on our federal return as income,how can this be it is a refund of our tax monies?
"yar" wrote
It's called "the tax benefit rule", and you only have to claim it as income on the federal return IF you took an itemized deduction for state tax paid (or withheld) in prior years.
So look on Schedule A on your 2006 return to see if indeed you took anything for state tax paid. If so, it's most likely going to be taxable.
If not, as in you took the standard deduction amount, then as they say in Jersey "fuget'boudit".
If you took a deduction that provided a tax benefit (presuming no amt), the refund is taxable income
.... will never happen here in NJ - they overspend & only increase taxes
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