It WAS incorrectly included in taxable income on Line 15 of Form 1040. I finally was able to get it excluded from taxable income by completing the entries on Part VI Recovery Exclusion From Income Tax Credits, Lines 26 through 35 of the TurboTax 2023 State and Local Tax Refund Worksheet. By doing that, the program completed Part III of the worksheet correctly to show the $5 as a recovery exclusion on Line 11 of Part III and not a Taxable Refund on Part IV, Lines 12 and 14 of the worksheet.
