Get your taxes done using TurboTax

No you can not have a state tax due deducted from the federal refund.  No way, not possible.  So something else is going on.  Did you owe the state for a prior year?  You will still get the full 529 refund.  Turbo Tax is probably just showing you the NET amount of your federal and state. That's just for your own information.   But each one is completely separate.