Whether or not you should worry about it depends on if this is taxable income in 2021. If you itemized your deductions in 2020, you may have to report this Colorado state income tax refund as reportable income in 2021. To report this income:
- Select Federal, and then Income & Expenses.
- Select Other Common Income then select Refunds Received for State/Local Tax Returns.
- Follow the screens to enter your 1099-G information.
After entering the information on the screens, even if you did itemize your deductions, there is a chance that the refund will not be taxable income this year. However, if it is, and you feel the information reported on the form is not accurate, you can contact the state to try to issue a corrected form.
