No, box 1 is not a taxable grant and it should not be entered that way. Virginia has created a combined form that is unique only to Virginia that must be entered into two separate sections in TurboTax.
To enter the information reported in box 1 for your Virginia income tax refund, use these steps:
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “state and local tax refund” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to state and local tax refund”
- Click on the blue “Jump to state and local tax refund” link and enter your information
Then use these steps to report the portion that represents interest income shown in box 2 of the Virginia combined form:
- On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
- This opens a box where you can type in “1099-INT” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
- The search results will give you an option to “Jump to 1099-INT”
- Click on the blue “Jump to 1099-INT” link