I applied the state overpayment (2016) to 2017 instead of having it refunded to me. The problem is that I forgot to include the estimated taxes I sent in for 2016 in my 2016 return. So, the state discovered my error and returned that amount to me in 2018 (they didn't get around to it until then). The 1099G I received from the state recently for 2018, however, includes both amounts (2016 amount applied to 2017 and the amount I received in 2018) instead of just the amount actually returned to me in 2018. I am trying to use Pub. 525, Worksheet #2 to account for this but am not clear at all as to what amount to put where on that worksheet.
