<prompt> Human: This is for California. For simplicity, ignore underpayment penalty and interest free loan from and to the government by paying too little or too much tax.At the end of the year, you will owe a certain amount of state income tax. It does not matter how much tax youve paid throughout the year. If you owe 5,000, and paid 6,000, you will get back 1,000. If you only paid 4,000, you will owe 1,000.Heres where it gets dicey. You can deduct state income tax on your federal tax return. So you might as well maximize what you pay state income tax, and get that federal deduction. You then get back what you overpaid on state income tax.I am definitely missing something here otherwise everybody would be doing this?  <response>: Youre missing the fact that, if you itemize a state tax deduction and you get a refund, that refund is taxable income the next year on your federal taxes. 