Why does turbox seems to claiming too much of 2017 state tax refund taxable. error is due to over paying with the extension in 2018 ?

It seems to me a state refund is taxable only to the extent the benefit you got in previous year was more than the actual tax was

I itemized 2017 and 2018,  used payment of state tax, not sales tax, and was way above the standard deduction in 2017

state taxes claimed on 2017 schedule A   4,521.
                  Withheld in 2017                  4,521.
                   Paid with 4/15/18 Extension  214

actual 2018 taxes (after credits) -  $4381

My refund for 17 taxes received in 2018 was  354 refund I assert I ONLY  owe tax on only Tax on 140

Turbo tax says I owe tax on 338 of 354 ?

there are no other estimated taxes paid