Is it true for Arizona filers? I agree that when you receive a prior year AZ state refund (e.g. 2019) it should be reported as income for the following year (e.g. 2020). But why is the refund amount also reported as 2020 AZ state income? I notice this when viewing the TT Form 1040 and 140 details. This appears to be paying (additional) state income taxes on the prior-year overpaid taxes which were refunded.
Would appreciate an answer this question.
