State and Federal are two completely different entities. The IRS and state tax departments each maintain their own, separate tax collection systems.
Some states start processing e-filed returns at the same time as the IRS,
while others don't start processing until sometime later.
TurboTax doesn't control the order that your returns are processed, nor is there a way that you can pay your state refund from your Federal return.
This means you can't apply your federal refund to pay off your state taxes, nor the other way around.
Likewise, if you're filing more than one state return, you can't use the refund from one state to pay off another state.
Now, if you're using the Refund Processing Service, you can pay your TurboTax state preparation fee with your federal refund – just not your state tax bill.
