It took me weeks to finally figure this out! Once you enter your numbers, go to Tax Tools > Tools > View your 1040. The Refund check will be there and the amount will be transfered to all correct areas for federal!
STEP BY STEP – NY INFLATION REFUND CHECK IN TURBOTAX (1099-G)
Open your return in TurboTax.
Go to Federal.
Go to Wages & Income.
Depending on where you're at click:
a. '+ Add more income' and then/or
b. 'Refunds Received for State/Local Tax Returns'
c. Click 'Add' or 'Revisit'
At 'Did you get a state or local tax refund in 2025?' click YES
When asked about the refund you received in 2025, enter:
State: New York
Tax return year: 2023
Payments and withholding: 0
Refund amount: enter full amount for MFJ or ONLY YOUR SHARE if half of the total amount on the 1099-G
Continue.
You will see the question:
“Does either apply to your 2023 New York return?”
Even though you took the standard deduction, select:
NO
Why do we select NO?
We selected NO because the NY inflation refund is not a normal tax refund, and choosing NO forces TurboTax to include it in federal income while subtracting it from New York tax, which is exactly what NY requires.
8. TurboTax will then ask:
“Tell us the taxable amount of your refund”
9. Enter the dollar amount of the refund. Click Continue.
10. Continue through the rest of the Federal section.
11. Now go to State and complete your New York return as normal.
12. For federal confirmation, open your 1040.
13. Look at Line 8z (Other income).
14. You should see your half (or all) of the refund included there.
15.If Schedule 1 line 8z includes it AND IT-201 line 25 subtracts it, everything is correct.
KEY POINTS TO REMEMBER
The check is based on 2023 income but taxed federally in the year received.
TurboTax explanations about 2024 are generic and can be ignored.
Do not split any other way.
Do not enter it as Other Income directly.
To confirm:
Where it shows up on the federal 1040
On the 2025 Form 1040, the inflation refund shows up as “Other income.”
Look at:
Schedule 1 (Form 1040)
➡ Part I – Additional Income
➡You'll see your refund amount in Schedule 1, line 10
➡ Form 1040, line 8 (via total income)
To really confirm:
1. Look at your Federal and State returns BEFORE you do all this, and then once youre done. Your FEDERAL will go down by the amount of your tax bracket.
This one is for the history books!!! Share this with as many people as you can : )
