Is a state refund for 2021 considered as income for 2022

[amperier65]

I live in CT

[rjs]

The 2021 state tax refund that you received in 2022 is taxable income on your federal tax return for 2022 only if you claimed an itemized deduction for state income tax on your 2021 federal tax return, and you actually got a tax benefit from deducting the amount that was later refunded. If you took the standard deduction on your 2021 federal tax return you can just ignore the state refund. Don't even bother entering it into TurboTax for 2022.

If you claimed itemized deductions on your 2021 federal tax return, enter the state refund in TurboTax and TurboTax will ask questions about your 2021 federal tax return to determine whether part or all of the refund is taxable. Because of the cap on the federal deduction for state and local taxes ("SALT") there is a good chance that the refund will turn out to not be taxable, but you have to let TurboTax do the calculations.

The state tax refund is not taxable income on your 2022 state tax return under any circumstances.

[Donna1957]

my 2021 state refund is showing as income in TT2022.  FYI, i itemized my deductions.  but u mention that oftentimes refunds turn out to not be taxable but to let TT run the numbers.  Of those questions, how do i answer TT questions from my 2021 return, such as state/local income tax; state & local real estate tax; state & local personal property tax; state/local taxes after limitation; and itemized deduction for total taxes?  I'm not finding this info scrolling thru my 2021 filing.

[DoninGA]

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@Donna1957 wrote:

my 2021 state refund is showing as income in TT2022.  FYI, i itemized my deductions.  but u mention that oftentimes refunds turn out to not be taxable but to let TT run the numbers.  What part of TT asks the necessary questions?

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To enter a state or local tax refund (Form 1099-G) -

Click on Federal Taxes (Personal using Home and Business)
Click on Wages and Income (Personal Income using Home and Business)
Click on I'll choose what I work on (if shown)
Scroll down to Other Common Income
On Refunds Received for State/Local Tax Returns, click the start or update button

Or enter state refunds in the Search box located in the upper right of the program screen. Click on Jump to state refunds

[rjs]

@Donna1957 

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@Donna1957 wrote:

my 2021 state refund is showing as income in TT2022.

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Where exactly is it "showing as income"? If you are looking at the "Your 2022 Income Summary" page in TurboTax, that is showing what you entered, not what is actually being reported as taxable income. You have to look at the actual tax forms, not the summary page in TurboTax. If the refund is actually being reported as taxable income it will appear on Schedule 1 line 1, and will be included in the total other income on Form 1040 line 8. Do yo see it on those lines?

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@Donna1957 wrote:

FYI, i itemized my deductions.

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Did you itemize deductions on your 2021 federal tax return? If not, your 2021 state refund is not taxable, and you don't even have to enter it in your 2022 tax return. It doesn't matter whether you itemize deductions on your 2022 tax return.

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@Donna1957 wrote:

how do i answer TT questions from my 2021 return, such as state/local income tax; state & local real estate tax; state & local personal property tax; state/local taxes after limitation; and itemized deduction for total taxes?  I'm not finding this info scrolling thru my 2021 filing.

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All of that information is on Schedule A in your 2021 federal tax return. If you don't have Schedule A, you did not itemize deductions.