When you deduct your state and local taxes as an Itemized Deduction on your Schedule A in the prior year and you get a state refund that year, then your state refund that you received from the prior year may be taxable. TurboTax will do the calculations.
For more information, refer to the TurboTax Help article Do I need to report the state or local refund I got last year? Is it taxable?
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