state tax refund

[dyne]

The state tax refund is now not allows fully taxable. IRS Pub 525 states that only the
differance between the state tax refund and the general sales tax that COULD have been
claimed last year is taxable for those who itemized and deducted the state income tax
withheld last year. In experimenting I have found that this is a tax benefit with some clients but not all. This also makes it clear that taxpayers who deducted the general sales tax last year are NOT taxed with the state tax refund. Drake Tax Software
will calculate the taxable portion of the state tax refund if the preparer enters data
at the bottom of screen 99G.

[LawrenceGR]

Look at earlier post

There was a very discussion on this subject earlier. It does seem to be causing some confusion. Thank goodness there is a worksheet to calculate this.