the IRS has its way of computing the taxable portion of a state refund. the refund is prorated over the taxes you paid in 2018 and the taxes you paid for 2018 in 2019. let's say you paid $2000 in state taxes for 2018. $1500 in 2018 and $500 in 2019 and got a $200 refund. the proration would result in a refund from 2018 of $150
1500/2000= 75% times 200 = $150. the other $50 reduces the taxes you paid in 2019 for 2018 so if that were the only amount of state income taxes paid schedule A would only show $450. there should be a state tax refund worksheet among the various forms. in addition, the refund would not be taxable if you dd not itemize in 2018, were in alternative minimum tax that year in some cases. there is even a hypothetical calculation of sales taxes to see if the refund is taxable. DO NOT OVERRIDE.
