State Refund Taxability

4 replies
25 views

I received a 1099G for a State (NC) Tax refund for 2019 for an amount that should not have been taxed (a retirement payment that is exempt under NC law). I understand that refund should not be taxable by the feds if I used the standard deduction that year, which I did. Yet the TT worksheet put the amount on Sched 1, line 1 and Form 1040, line 8. How do I correct this? Ignore the 1099 G? Thx for any help!

KrisD15

Alumni - Intuit

Please clarify,

retirement payments, even state retirements, are reported on 1099-R.

Can you explain further the 1099-G?

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

RenaldAuthor

Level 2

For 2019, the retirement payment was indeed reported on a 1099-R and entered as such on my state and federal returns for that year. Two years later, I learned that this payment should have been exempt under the so called Bailey Case under NC law. So I filed an amended return and did indeed receive a refund of the NC tax I paid back in 2019. I received that refund in 2021 and it was that refund that is now being reported to me (and the IRS) on a Form 1099-G. I hope that answers your question?