Arizona state refunds
It may seem unusual to report state tax refunds as income on your federal tax return, but it’s important if you itemize deductions. Because state taxes are deductible on federal returns, a prior-year refund changes your overall liability retroactively. So, paying tax on a refund may seem a tad odd, but it corrects an “over-deduction from the previous year,” the National Association of Enrolled Agents says.
401(k)s
Workplace 401(k) plans offer a solid tax incentive for participants, allowing them to exclude contributions from current taxes and to enjoy tax-sheltered growth of investments.
Fidelity Investments says the average balance among 401(k) accounts it oversees rose to a record $71,500 in 2010. For in
