This question bslciaaly is looking to see if you should itemize your deductions or take the standard deduction.When you itemize, one of the things itemized is how much in taxes you paid to the states last year. They can figure out how much you paid from your paystub. They also want to know though, if you owed any money on your 2006 tax return that you paid then, because that counts towards "income taxes paid in 2007" for itemized deduction purposes.So what this question is asking is:- Did you owe any income tax on last years return that you paid.- Did you pay any back income taxes on last years return.- The key is that it's *state* income taxes. They don't care whether you owed / paid any federal income tax last year.Nothing too sinister.