Local tax overpayment credit taxable?

YES

(unless you had AMT - in which case you've got a bit of calculating to do)

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-----> real address on hobokeni or hobokenx

Yes, if you deducted it on a prior Schedule A and got full tax benefit from the deduction. See IRS Publication 525.

-- Phil Marti Clarksburg, MD

I assume that this is a local income tax. If you itemized it in a prior year - probably. Again the IT DEPENDS. I can not tell you for sure without looking at last years return. Rgs,

Mark

Like almost all tax questions, the answer depends. If you fully deducted the local taxes on your 2005 return (usually on Schedule A), then received a refund or credit in 2006 for a portion of the amount you deducted, the tax benefit doctrine requires you to include the refunded or credited amount as income on your 2006 return. Frederick Lorca

If your "local tax overpayment" resulted in a reduction of your federal income tax liability, then a refund of the overpayment (whether received in cash or as a credit) would be considered taxable income for the year received. Not all payments of local tax result in a tax benefit, however.