<prompt> Human: I still havent done my taxes from last year 2016 because Im a huge procrastinator CPA filed for an extension. I got a form from the IRS saying that I need to include my tax refund from last year as income. My 2015 state tax refund was about 500 and the 500 federal was garnished towards my student loans even though I was on a payment plan and still am. How come this measly refund amount is considered taxable? Ive received higher refund amounts in the past and have never gotten this kind of form before. Am I being doubly taxed?  <response>: Your state tax refund is taxable federally because the state taxes you paid reduce your federal taxable income if you itemize your deductions.So youre not being double taxed. Its just putting off some taxes to the next year after you receive the refund. 