When you are entering a state tax refund (Form W-2G) in Wages and Income:
Enter payments for the state for which you received the refund. If you received refunds from more than one state, enter each one separately in TurboTax and report payments associated with that state. Use the link to Add another state or local tax refund.
Under the entry field, "Total of all your payments and withholding", a link appears, "What does this include?". The text at that link explains:
Add up any payments you made to your state or locality, along with any state or locality withholdings from the previous tax year (in this case, 2021), including:
- Amounts withheld on your W-2, W-2G, and 1099
- Estimated tax payments for 2021 (including any paid in 2022 for 2021 - it's common for the fourth quarterly payment to be made in January)
- Overpayment from 2020 applied toward your 2021 return
- Payments made with an extension of time to file
- Refundable credits
You can find most of this info on your 2021 state tax return. Do not include balance-due payments made with (or after) filing a return. Enter the total amount of all of these combined here.
Anytime you enter a state refund from a prior year, there is a follow-up question to determine if it is taxable.
To revisit this section:
- Select Federal on the left side.
- Select Income & Expenses toward the upper left.
- Find Refunds Received for State/Local Tax Returns on the list and click Edit to the right.
- The next page should show your taxable state refunds, click Continue.
- The next screen Refunds From Years Prior to 2021, gives you the opportunity to show the amount is not taxable, but it defaults to taxable.
- If your refund is not taxable enter 0 in the Taxable amount box.
See this help article for more information on entering the form.
See this article for more information about Form 1099-G.
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