Get your taxes done using TurboTax

It depends.  The amount of the refund that is at least the difference between the standard deduction and your itemized deductions would be taxable in 2021.  Any refund of state tax for a prior year, received in the current tax year (2021) that was used as an itemized deduction would be included in taxable income.

TurboTax does not ask if you itemized on the federal return when the refund is for a year earlier than the immediate prior year (2020 for tax year 2021).

TurboTax Online is asking the customer to enter the amount that is taxable in 2021 as shown in the image below.  If you left that blank or put in a zero then TurboTax will not carry that refund to the tax return as part of your taxable income. 

• Here is the IRS State and Local Tax Refund Worksheet for your convenience.