I enter the amount of my 1099G for my state refund from 2016 using the step by step method. When I look at "Your 2017 Income Summary", it displays the amount entered as "State and Local Tax Refunds on Form 1099-G". When I complete my federal taxes and review the 1040, there is no amount entered for the state refund on line 10. I downloaded the 1040 Instructions and used the State and Local Income Tax Refund Worksheet-Line 10. The worksheet says I should enter my state refund amount on line 10, but TurboTax won't enter it. Is this a TurboTax error?
Yes, report last year’s state or local tax refund, and we’ll figure out if it’s taxable or not. If you took the standard deduction on your 2016 federal return, the state refund will not be taxed on your 2017 federal return.
If all three of the following are true, your refund counts as taxable income:
- You itemized deductions last year, instead of taking the standard deduction.
- You claimed state and local income taxes (not general sales taxes).
- Claiming the deduction helped you increase your federal refund or lower your tax bill.
Even when your refund is taxable, it may not be the entire amount. It depends on how much the deduction affected your refund or tax bill. Just answer a few simple questions about last year’s refund, and we’ll calculate the taxable amount for you.