The taxable amount of your prior year state refund is reported on line 10 and is based on the amount that is reported on your 1099G Form. There is a worksheet in the IRS Form 1040 instructions that is used to calculate the amount of the refund that is taxable.
Please
refer to pages 23-24 of the IRS Form 1040 instructions under the headings,
"line 10: taxable refunds, credits, or offsets of state and local income
taxes" and "state and local income tax refund worksheet - line
10" for additional information. https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
