In the past, TurboTax would automatically ask me to go back to prior year's tax form to figure out taxable amount of my state tax refund. But it is no more now . Why?

[Kat]

Did you use the Standard Deduction (versus Itemized Deduction) in your 2017 return?  The question would only be relevent if you itemized your deductions using Schedule A.

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[PL1]

In the past, TurboTax would ask me automatically to go back to prior tax year's TurboTax software to figure out taxable amount of my state tax refund due to AMT reason. In order to figure out taxable amount, I had to reduce my state refund gradually until AMT kicks in becoming non-zero. Then the remaining state refund is the non-taxable amount for this year because it wouldn't differ the tax liability in the previous year.

Somehow TurboTax software stops this step since several years ago. All the state tax refunds become FULLY TAXABLE whenever itemized deduction is done in the previous year. This doesn't make sense to me at all because the non-taxable amount subject to AMT in the previous year is taxed again this year.

[Kat]

@PL1  I'm not familiar enough with AMT to address your question.  I'll ask my fellow SuperUsers if anyone can assist.  If you get no reply from any of them, perhaps a TurboTax Support agent would be able to assist.

To contact TurboTax Customer Support, use the info linked below during regular business hours.

https://ttlc.intuit.com/community/using-turbotax/help/what-is-the-turbotax-phone-number/01/25632

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[tagteam]

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@PL1 wrote:

Somehow TurboTax software stops this step since several years ago. All the state tax refunds become FULLY TAXABLE whenever itemized deduction is done in the previous year.

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Are you referring to the step depicted in the screenshot below? I do not believe the software has been programmed differently for scenarios where users itemized and then receive a state tax refund the following tax year.

In the event you are referring to something completely different, please clarify. 

[PL1]

No, I am referring the following page. Once I choose "itemize ...", it no longer asks me to go back to 2017 TurboTax to separate the taxable and non-taxable amount due to AMT. The full amount of 2017 state tax refund becomes taxable, which doesn't make sense at all.