Is a 2022 refund of the Kansas City Earnings Tax that was for tax year 2020 treated as taxable income? TurboTax is treating as taxable income but I wanted to make sure.

[MayaD]

The 2020 state refund that you received in 2022, may be taxable if you itemized your deductions in 2020. 

 If all three of the following are true, your refund counts as taxable income:

• You itemized deductions that year, instead of taking the standard deduction
• You claimed state and local income taxes (not general sales taxes)
• Claiming the deduction helped you increase your federal refund or lower your tax bill

Even when your refund is taxable, it may not be the entire amount. It depends on how much the deduction affected your refund or tax bill. Just answer a few simple questions about last year’s refund, and we’ll calculate the taxable amount for you.

Where do I enter a 1099-G for a state or local tax refund?

[coleman3]

The Kansas City Earnings Tax is a local not state tax.  It is a 1% income tax on anyone working in Kansas City, MO (we are residents of Kansas).

[JohnW152]

Since the Kansas City Earnings Tax taxes income, a refund would be taxable when the scenario that MayaD lays out above is present.

@coleman3