You do need to file the Form 540X to amend your California return. You will not get a revised Form 1099-G from California for 2025. Since your refund is not corrected until 2025, you will treat the refund received in 2025 as being correct, since you report income on a cash basis on your tax return. The state tax you pay back in 2025 will be accounted for on that tax return as state taxes paid in. You will file the 2025 tax return in 2026.
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