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From: halle1@houxz.UUCP (J.HALLE)
Newsgroups: net.taxes
Subject: Re: id AA12739; Wed, 22 Feb 84 05:23:25 pst
Message-ID: <676@houxz.UUCP>
Date: Wed, 22-Feb-84 17:02:58 EST
Article-I.D.: houxz.676
Posted: Wed Feb 22 17:02:58 1984
Date-Received: Thu, 23-Feb-84 05:37:20 EST
References: <5739@decwrl.UUCP>
Organization: Bell Labs, Holmdel NJ
Lines: 9

You only need to report any state or local tax refund to the extent
it reduced your tax.  If you did not itemize, ie you took the standard
deduction, you do not report it at all.  If you did itemize and declared
a deduction for the taxes paid, you must report the refund as income,
WITH ONE EXCEPTION.  Suppose your itemized deductions totaled $3500,
including $900 for state tax.  (Just example numbers.  Assuming
married so standard deduction is $3400.)  You received a $300 refund.
Only $100 of this is reported, as the remaining $200 did not reduce your
tax.  (I doubt that this exception ever happens, but it is part of the code.)