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What it is, nuyawkr is that last year you likely deducted your state income tax as part of your itemized deductions, correct?

Correct.

I should add that I did not itemize my state taxes last year, as being a homeowner for only four months was not enough to push me past NY's standard deduction.

If thats true, therefore you deducted something that you then got a $77 refund for. Don't think nobody noticed ;). The $77 is therefore income in the year you received it (i.e. 2006).

I guess one of the things that's confusing me is that this $77 is somewhat less than the ~$120 refund I got from NY last year. (I just went in to Quicken to check the amount.)

Make sense? Feel free to ask away.

It's starting to become clear.

Some questions that occur to me:
-Where would I include this $77 on my 1040?
-I did some back-of-the-envelope calculations right before Christmas showing that I will be receiving large Federal and State refunds this year (I miscalculated when adjusting my W-4 last year, didn't take enough withholding). I assume this means I'll have a similar issue next year?
-If this is something I'm likely to run into on an ongoing basis, is there something I can do to mitigate/minimize its effects every year? (I'd rather just get the taxes right, than have to make an adjustment every year.)

Thanks,
Nuyawkr
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