The New York "inflation refund" is taxed at the Federal level but is not taxable on your New York return.
Since this is not a typical 1099-G item for a refund of taxes paid, you can choose to enter it instead in the Other Taxable Income section of TurboTax with an explanation.
- From the left menu, go to Federal and select the first tab, Wages & Income
- Add more income by scrolling down to the last option, Less Common Income, and Show more
- Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
- Choose the last option, Other reportable income and Start and Yes
- Enter the applicable description and amount and Continue
If you need to subtract an item of income from your New York return that was included in your Federal return income, you can enter that adjustment in TurboTax Online at the screen in your New York return labeled "Changes to Federal Income".
Look under Other New York Adjustments to Federal Income, and select Start next to Other changes (adjustments) to your federal income to make the subtraction entry.
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