Not sure if people are still running into this problem. I was in late February, but as of mid-March it looks like TT may have fixed it. Because I knew it should not be taxed, I went to remove the 1099-G from the return and I noticed that the refund calculator did not change. So I added it again (the same way I had previously) and after answering the questions this time it said "your refund is not taxable." Previously it had been saying that it was taxable. I changed nothing so it may have been an update in TT.
