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I received a state tax refund for 2013/4/5 because of a tax filing error. I received all three refunds in 2016. Will I have to claim them all as income?

 
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2 Replies

I received a state tax refund for 2013/4/5 because of a tax filing error. I received all three refunds in 2016. Will I have to claim them all as income?

Unfortunately this is one of those "it depends" situations.  If you itemized in those years and were able to get tax benefit from all your itemized deductions then the refunds will be taxable.  If you didn't itemize in those years then generally the answer should be that the refunds are not taxable.  If you have a mixture of "standard deduction"/"itemized deduction" over this period or if you itemized and were not able to take your fill itemized deduction due to the Pease phaseout then some amount could be taxable and some amount would not.  I don't think TurboTax can really deal with this situation very well, though I'm not sure.

I received a state tax refund for 2013/4/5 because of a tax filing error. I received all three refunds in 2016. Will I have to claim them all as income?

You need to figure it out individually looking at each year.  Turbotax isn't smart enough to handle multiple years.

Start with 2013.  If you deducted your state income taxes as an itemized deduction on schedule A of your 2013 federal tax return, and if your schedule A deduction after subtracting the refund is still more than the standard deduction for that year, then the refund of 2013 tax monies is taxable in the year you received it.  You will need to look at line 5a of schedule A and line 40 of form 1040.

Then repeat the analysis for your 2014 federal return and your 2015 federal return.

If the refunds are income, report them on the wages and income page under refunds of state taxes.

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