New Member

My 2015 state tax deduction was $7,220. My state tax refund was $677 in 2016. I have included as a refund on my 2016 return, but my form 1040 shows 0 on line 10. Why?

I do not understand why the refund from prior year is not taxable.

Intuit Alumni

After you file

You may have used the sales tax deduction as the option to deduct state tax in 2015.

Schedule A line 5b.

If that was the case, or if you took the standard deduction in 2015, the refund is not taxable in 2016.

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