To find out if your state refund from last year is tax-deductible, the program needs to know your 2023 federal information. As xmasbaby0 mentioned, for the prior year state refund is taxable, all three of the following statements must be true:
- 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.
By answering the information the program is asking, TurboTax will calculate the taxable amount for you.
@robsvb
