No Good Deed Goes Unpunished

If you live in Oklahoma and paid state taxes in 2004, you should have already received $45 in tax rebates ($90 if you filed jointly with your spouse).

We were quite surprised when we got our check in the mail, having been blissfully ignorant of the rebate program. Ninety bucks ain't what it used to be, but it's still spendable money, so we had to tip our hat in the general direction of Oklahoma City and the lawmakers who, for once, decided to do something nice for us.

However, we are not surprised that the IRS has issued a blanket fatwa of joy killing (BFJK) against the Okie citizenry, declaring that the state's gift to us is as a matter of posted bureaucratic fact taxable income. Thus a good portion of this "largess" will transfer to Washington, D.C.

We are not surprised, but that does not mean we have it figured out. The tax rebate was from taxes paid to the state from 2004 income, of which 100% of all applicable federal taxes had already been paid. When you calculate your federal taxes, you do not get to fudge for the state taxes you think you'll have to pay. So how does getting a portion of your state taxes back somehow constitute new "income"?

It doesn't compute. We are being taxed twice on that $90. So what are we gonna do about it?

Absolutely nothing except declare it and pay up.

But we don't have to be happy about it.