This year Mary received a $325 refund of state income taxes that she deducted on her tax return last year. Mary included a total of $7,850 of state income taxes when she itemized deductions last year. What amount of the refund, if any, should Mary include in her gross income this year?

• $325 is included if itemized deductions exceeded the standard deduction by $325.

• $325 is included because itemized deductions exceeded the standard deduction.

• None of the choices are correct - refunds of state income taxes are not included in gross income.

• $325 is included even if Mary claimed the standard deduction.

• $325 is included because Mary itemized her deductions last year.