Full Disclosure: I am a college student who is majoring in Accounting, and not a tax expert. However, I will do my best to help you with the information I have available to me.
According to my research, basically any time that a
state refundable credit provides you with an actual cash refund, then the amount is usually considered taxable income on your
federal tax form. Note that
federal refundable credits are not considered taxable income for either state tax purposes or federal tax purposes. Only
state refundable credits are considered taxable income (
and only when they created a situation where they provide you with a cash refund. In situations where the
state refundable credit is used to reduce tax liability and it does
not create a situation where you get a
cash refund, then the credit is
not considered taxable income).
Hopefully this makes you less confused. Let me know if I helped.
Source:
http://www.taxnotes.com/tax-notes/f...axation-state-tax-credits/2016/05/30/18497601