Why are my 2015 refunds showing up as income for 2016?

[PeterM · Accepted solution]

In some circumstances, your prior year state tax refund is taxable in the current tax year. Your federal tax refund is never taxable.

If by claiming an itemized deduction for state taxes paid in 2015 you received a refund, the tax refund from your state will be taxed in the following year at the federal level. It only happens when you itemize your deductions as opposed to taking the standard deduction.

[cngergits]

Thanks.  How do I find out if I itemized my state taxes last year?

[PeterM]

Look at the 2015 tax return. If you have a Schedule A, then you itemized. If Line 40 of the Form 1040 was $6,300, or 12,600, or 9,250...then you took the Standard Deduction