| Nearly 67 percent of all taxpayers around the | | | | tax last year and your state returned your |
| country are entitled to state tax refunds, and the | | | | money this year, for example, you must pay |
| amount of these refunds is worth lining up for. In | | | | taxes on it this year. Expect to receive (if you |
| the state of California, for example, refunds | | | | haven't yet) a form 1099 from your state, |
| averaged around $760. The average for most | | | | reminding you about that returned money. Your |
| other states was about $550 in 2005. | | | | state also sent a copy to the IRS, binding you to |
| Guidelines vary from state to state, so it is best | | | | pay the appropriate taxes. But there are |
| to consult an accountant. As a general rule, | | | | exceptions. |
| though, low-income individuals and families could | | | | The state tax refund is fully taxable if you |
| claim property-tax refunds or rent credits if they | | | | detailed the deductions on your federal tax |
| filed income tax returns. And in many cases, you | | | | returns. Check with your accountant, though, |
| can still get tax refunds even if you do not meet | | | | because there's still a chance that part of it is |
| the tax filing threshold, because you may have | | | | tax-free (even if you did itemize). If you owed |
| money withheld from your paychecks, or | | | | the alternative minimum tax during the year of |
| because you may be eligible for the federal | | | | the refund, for example, there's a chance that |
| earned-income tax credit. This applies if you earn | | | | your refund may not be taxable. |
| less than $33,000 and have more than one child, | | | | But if you are among the 70 percent of |
| or earn less than $29,000 and have one child, or | | | | taxpayers who did not itemize deductions on your |
| earn less than $11,000 and do not have a child. | | | | return, then you don't have to worry about a |
| Are state tax refunds taxable? Yes and no. State | | | | thing. You do not have to pay taxes on the state |
| tax refunds are typically taxable the year you | | | | refund you received. |
| receive them. If you overpaid your state income | | | | |