Are State tax refunds taxable on Federal tax returns?
State tax refunds received from 2005 tax return's are only includable as taxable income in 2006 tax return provided the the taxpayer itemized on his 2005 tax year.
If taxpayer did not elect to itemize on his 2005 year tax return, than the state tax refund from that year would not be includable as taxable income on the 2006 tax return.
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