There are several things going on.
First, if you pay your full property tax bill and then get a STAR rebate check, you must reduce the amount you report as a property tax deduction in the federal income tax section (as part of your mortgage). You must do this yourself, Turbotax does not calculate it for you. If you paid a reduced property tax amount due to having the credit on your bill, don't modify your deduction because it was already reduced.
Second, I believe there is a general question on the New York form asking if you got a rebate. Enter it here, but this has no effect on your taxes, it's just a question they ask.
Then third, you can claim the property tax relief credit, it should be listed on the page for state-specific additions and subtractions. Answer the questions provided.
