I filed itemized deduction on my previous years tax returns. How to determine if the refund is taxable?

[shetty-vineet]

Turbotax offered me to do itemized deduction because I had paid property tax, mortgage interest and child dependent care. Will any of the amount from my refund be taxable?

[Mike9241]

your federal refund is never taxable, state refund may be taxable if you took a deduction for state income taxes rather than state sales taxes. if you used Turbotax in 2023 and took a state income tax deduction,  it should be able to compute the taxable portion of the refund automatically.

to check the computation you can use worksheets 2a and 2 in IS PUB 525. Turbotax also has similar worksheets but you can't see them until you pay any Turbotax fees.

https://www.irs.gov/pub/irs-pdf/p525.pdf 

[shetty-vineet]

Thanks Mike!

But how do I check if I took state income tax deduction? Is there anywhere in the filed form that I can check this?

[AnnetteB6]

You can look at the Schedule A Itemized Deductions that is part of your 2023 return.  Check line 5a.  There is a box next to that line that will be checked with an 'x' if you used sales tax deduction instead of state and local sales tax.

If you used TurboTax for your 2023 return, the program should already know that information and it will be taken into account when you enter the state refund amount to determine if it is taxable.  If you did not use TurboTax for 2023, there will be questions to answer when you enter your 2023 state refund amount so that it can be determined whether the refund is taxable on your 2024 return.  

@shetty-vineet