The $5 is listed as income on your summary, but it is not included in your taxable income. If you took the standard deduction the previous year, the refund is not taxable. Are you saying, it is included with taxable income on Line 15 of Form 1040?
Report last year’s state or local tax refund, and we’ll figure out if it’s taxable or not. (TurboTax automatically entered the $5)
If all three of the following are true, your refund counts as taxable income:
- You itemized deductions last year, instead of taking the standard deduction.
- You claimed state and local income taxes (not general sales taxes).
- Claiming the deduction helped you increase your federal refund or lower your tax bill.
Even when your refund is taxable, it may not be the entire amount. It depends on how much the deduction affected your refund or tax bill. Just answer a few simple questions about last year’s refund, and we’ll calculate the taxable amount for you. @Keith L
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