If you look at the first line of the image you attached, "Before you begin," it tells you to check the Exception in the instructions for this line (the IRS 2025 1040 instructions, Schedule 1 instructions on page 88) to see if you are allowed to use this worksheet instead of IRS Publication 525 - Taxable and Nontaxable Income, Itemized Deduction Recoveries, to figure if any of your refund is taxable. TurboTax is programmed using the full logic of Publication 525, not this simpler worksheet based on the Exception.
Hope this is clarifying.
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