That depends on how you filed your federal tax return in 2015. If you took the standard deduction, the state tax refund you received in 2017 isn't taxable. But if you claimed your state income tax as an itemized deduction on your 2015 return and received a tax benefit by doing so, all or part of your state tax refund may be taxable on your 2017 federal return. TurboTax will use the information you provide during the tax interview to determine if your state tax refund is taxable or not. Click here for instructions on how to enter your state tax refund in TurboTax.
Turbo tax is not helping me with determining the amount taxable. If the withholding was 7,000 and the state refund was 5,000 would the taxable amount be 2,000 and not the full 7,000 as that was just withholding and not actual income tax?