Tax Question: Double taxed on refunds?

[Karana]

I'm just curious, but hoping someone can explain this to me...

Why are we double-taxed on tax refunds? Or at least, it feels that way!

Like... for 2010 we received a $300 refund from the state of Utah. So when we filed our taxes for 2011, we had to report the refund as income. And after doing all the applicable worksheets, etc, the entire amount was taxable.

Why is this?

It drives me nuts. :/

[hut]

Go to the following links:

http://answers.yahoo.com/question/in...8143646AACvWtt
http://answers.yahoo.com/question/in...0094309AAyyval

[RoseparkStar]

I'm glad I followed hut's links because I was going "oh poop! I've never reported my state refunds as taxable income". Now I know that I'm ok because I dont itemized, I never have (never had enough expenses to qualify).

[Karana]

Thank you, Hut!!!