It sounds like you have the right result. If the state tax return was taxable federal income, it would be taxable income in the year it was actually received, not the year it was for. Since you received it in 2020, it would be income on your 2020 tax return that you will file next spring. However, if you use the standard deduction on your 2018 tax return, then the 2018 state tax refund will not be taxable in any case.
