Christina and Javier, a married couple filing a joint return, received a state income tax refund in 2021 for state taxes they overpaid in 2020. They were able to reduce their 2020 federal tax liability by itemizing and claiming a deduction for state and local income taxes paid that year. When Christina and Javier file their 2021 return, they may need to report all or part of the state tax refund they received in 2021 as:
