Question: Mark itemized his deductions last year and received a state tax refund of $ 1 , 2 0 0 . How should his state tax

Mark itemized his deductions last year and received a state tax refund of $1,200. How should his state tax refund be reported on his federal tax return?
Determine the taxable amount and report it on this year's return.
It is not reported, as state tax refunds are not taxable.
Report it as tax-free income.
Report the entire $1,200 as taxable income.

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