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Had a discussion in tax class least night and wanted to run this past those who have more experience with sales tax. I live and work in a state with income tax but no sales tax.

Taxpayer itemized deductions including state income tax and receives a refund. Refund is taxable income the following year.

Taxpayer itemizes deduction including sales tax and receives a refund. Refund is taxable income the following year. No different than if taxpayer deducted income tax.

We had a difference of opinion about whether the refund would be taxable income depending on which was used on the Schedule A.

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