Q. Is it required to deduct "State Income Taxes Paid" if you itemize (Schedule A)?
A. No.
Q. But by including it (even though it wasn't used) Would it be taxed on my state refund next year?
A. No. You state refund is not automatically taxed just because you itemized. TT does a work sheet to calculate the taxable portion, of the refund, if any. The property tax is counted as a deduction first.
