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Deductions & credits
Turbotax should perform a "tax benefit calculation." You will be asked certain questions, or the program will take the info from your 2024 return if you use your 2024 return to start 2025.
Basically, in your situation, if you had $9000 of withholding in 2024 but will receive a $4000 refund in 2025, you took too large a deduction, $9000 instead of $5000. The tax benefit calculation looks at what your tax and deductions would have been if you had only deducted the $5000. In your case, that would still result in a SALT deduction over the cap ($12,000 instead of $16,000), so you received no benefit from the extra $4000 deduction, so the refund should not be taxable.
March 24, 2025
9:00 AM