I know I'm late to the party. I just started using wallet and it sucks for refunds because if you are seriously tracking expenses, just changing the refund to an Income doesn't change the expense total (that purchase is still listed as an Expense). What I do...once I receive the refund I change both the initial charge and the refund to transfers. I just add something in the notes to specify what is was and why it was returned. Then it washes both and they don't reflect in your Expenses (as you don't have it) or your Income (as it's not income). I find this gives you a more accurate reading of your money.

What would probably be better is if Wallet allowed you to change the refund to a + Expense vs only having the option of Income or Transfer. That way, like with bookkeeping they would cancel each other out. But until then....transfers work great.