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In 2006 I received a partial refund of my 2003 state taxes due to filing an amended return. So the question is, do I have to declare this as income on my 2006 federal return?

In 2003 I paid a little AMT, so I believe it is safe to not declare this refund as income, as my Schedule A deductions were trashed by AMT. Is it correct that if you pay any AMT at all, it means that your usual Schedule A deductions don't count at all (except for the few that AMT allows, of course)?

No. It means you need to read up on the issue in Pub 525. (You are correct that the Federal year you're looking at is 2003.

Second item: The state sent along some interest as part of the refund check. I believe that there is no excuse not to declare the interest. Right?

Slam dunk.

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