<p>Gee whiz… I’m trying to understand the concepts underlying all this, but it appears these federal tax credits which are creating a hefty refund are jacking my state income taxes way up.</p>
<p>Well, at least I can use some of the federal refund to pay the state! yikes.</p>
<p>Really? I don’t think they affect our State taxes where I live. At least they didn’t in prior years. Have not done them yet this year. (as far as I recall from last year there is nothing in our State taxes about how much federal tax we pay, but I have slept since then).</p>
<p>Yeah… I’ve been trying to figure it out. Here they somehow reckon your federal tax liability in a way that adjusts for those federal credits/refunds – I don’t know. I’ve been juggling numbers and just trying to follow directions even when I didn’t understand them for 3 days now. It may be our state income tax is spiking for some other entirely different reason.</p>
<p>Anyway, it doesn’t matter. It is what it is. The federal tax refund will be quite ample this year. Enough to pay the state taxes and to pay a nice chunk of D’s COA for spring term. Can’t complain!</p>
<p>I have done our federal taxes, both kids’ fed taxes, a corrected FAFSA for D, a FAFSA for S, the Profile for S, state taxes for both kids… and I’m just wrangling now with our state taxes. After that I have a couple non-resident returns to do for other states where H has small amounts withheld that we can get back.</p>
<p>In a few days I’ll be done with all that. Then I can get all the IDOC stuff together and fill out two other forms that S’s college requires. (Fortunately, they’re short ones!) Oh, yeah, and I have one more scholarship app to help D pull together by next Tuesday’s deadline. Ah kids. Ah financial aid. I mean, I am SOOO grateful for it, but this time of year it’s a big undertaking!</p>
<p>Just because you get a refund, doesn’t mean you aren’t paying still paying too much 
Just means your withholding was high!</p>
<p>It depends on the state, but a tax CREDIT on the federal shouldn’t affect your state refund. Now if you got the tuition deduction, that should affect most states.</p>
<p>Depends on the state. Here in CT the state tax is based on Federal Adjusted Gross Income … so nothing on the back page of the Form 1040 comes into play.</p>
<p>Sounds like you should work for H&R Block. I haven’t heard of a state where they do the calculation that you described but I can certainly believe it. States seem to get very creative about taxation and I have to look at a few state returns for my son (he’s going to do them I think) that are very, very messy.</p>
<p>NH doesn’t have a general income tax which is nice but they do have an interest and dividends tax above $4,800. Nothing to do with Federal taxes though.</p>
<p>Which state are you talking about?</p>
<p>I’ve had to file in a number of states and live in MA and the norm is for a state to tax based on state-adjusted AGI. There will be state specific exclusions - like a different rate or exemption level for interest and dividends paid from local companies - but states “get you” because, as noted, they base their taxation on the front page of the 1040.</p>