DO NOT enter it as a 1099-G, be sure to enter it as a tax refund.
(Screenshot #1 is what you DON'T do)
Type refunds-state income tax into the search box and click the "Jump to refunds-state income tax" link
Wages & Income
Scroll down to “Other Common Income” (First click “Show all income” if needed)
Click Start next to Refunds Received for State/Local Tax Returns
(DO NOT CLICK OTHER 1099-G INCOME WHICH IS BELOW THIS LINE)
Follow the screenshots below: