If both you and your wife did not itemize your deductions in 2020, then your state tax refunds are not taxable in 2021. Answer the onscreen interview based on your tax information that was carried over.
If either one of you itemized your deductions in 2020, generally the state refund that was a result of itemized deductions, is taxable. If you itemized your deductions, don't enter your wife's state refund amount and answer the onscreen interview based on your tax information that was carried over.
If both of you itemized your deductions in tax year 2020, enter both state refunds, and combine the requested information as you go through the TurboTax onscreen interview.
Source: IRS
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