[aRatFlail]

I received in the mail a tax document from the state I used to live in which states, for box 1, "Shows TOTAL OVERPAYMENT before credits, refunds, contributions, consumer's use tax payments and offsets of state and local income tax for a previous tax year. Any refund or overpayment for this amount should have previously been issued or credited to your account. If there is any entry in this box, that amount may be taxable on your federal return if you deducted the tax paid as an itemized deduction for that year."

There is no interest paid on the tax refund, as stated in box 2, and its for the year 2009. I've already filed my 2010 taxes, and now I have this document. What exactly do I do with this? I apparently need to amend my tax return, but how? It says the form takes the place of 1099-G and 1099-INT. I'd already put in a 1099-INT with my credit card and interest income on that, so do I try and go back and stack this on as well?

[AtlantaTaxExpert]

If you did NOT itemize on your 2009 tax return, you can destroy the form you got. It is a Form 1099-G, which reports the state refund to the IRS.

State and local withheld from your salary is an itemized deduction on your federal return. If you claim that itemized deduction, then later get a state or local tax refund, that refund MUST be considered taxable income for your 2010 tax return.

If you DID itemize, the refund amount, if over $300, WILL be noticed by the IRS. They may automatically adjust your filed return to include the income, or they may send you an audit notice asking WHY you did not include that income on your return.