State and Local Income Tax Refund Worksheet Issue

Forum|Forum|3 months ago
March 2, 2026
1 reply
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I did not itemize deductions on my 2024 federal return. I received a 2024 state and local income tax refund. I paid my 4th quarter 2024 state and local estimated tax in 2025. The State and Local Income Tax Refund Worksheet in TT shows the 2024 refund, the 4th quarter state estimated payment, the total of all my 2024 state and local estimated payments, but it does not show the 4th quarter local estimate payment. It subtracts the 4th quarter state payment from the refund to calculate the Refund Allocated to Tax paid after 12/31/2024 (Part I, Line 3). Why is the local payment missing and not used in the calculation?

DianeW777

Level 15

If I understand you had a refund in 2025 for your 2024 tax return, and you also paid your last estimated tax payment in 2025 for the 2024 tax return. The difference between these two amounts is what would be allowed to be used for itemized deductions, if the payment was higher than the refund amount, simply because the payment and refund occurred in the same tax year.

Since you used the standard deduction in 2024, there is no need to report any refund, regardless if it was more than the amount paid in 2025, for 2024.

Please update if you have additional questions.

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pfgoldAuthor

Level 2

I agree my 2024 state and local tax refund should not be reported as income on my 2025 federal return since I did not itemize on my 2024 federal return. But, TT is using the refund in calculations on the Schedule A, Line 5 Worksheet, specifically Line 19, which is the state and local refund allocated to 2025. The Schedule 1, Line 1 Worksheet is also using the refund in the calculations on that sheet. The resulting amount ends up on Schedule A, Line 5a.

LeticiaF1

Level 12

You are correct, your 2024 state refund should not be reported as income if you did not itemize in 2024. If the program calculated that your refund is taxable, is due to how you answered the questions about your refund. You should go back and review your entries:

Go to the Wages and Income section, and go to Other Common income
Select Refunds Received for State/Local Tax Returns
On the Did you get a state or local tax refund in 2024? screen, select Yes
On the Tell us about your refund screen, enter your total refund received in 2024
After you enter the information on your refund, a different section will start asking about your itemized deductions

After these questions, you will get questions to determine if your state's refund is taxable. See the images below for your reference.