I received what I believe is an incorrect 1099-G for Massachusetts. It indicated I received a state refund of $344 because last year when I filed my return I initially received a refund of $344. However, I later amended/corrected my state return and found that I actually owed $59. So I ended up writing a check back to the state for $403 ($344 refund paid back + $59 owed).
So my question is, do I still need to include this 1099-G in my federal return, pay federal taxes on the $344, even though I did not really end up with the refund listed on it?
You have two options:
1) Include the 1099-G for $344, but then claim $403 as a state tax deduction.
2) Ignore the 1099-G and claim a $59 state tax deduction.
To enter state taxes paid in 2016 (not including W2 and 1099 withholdings, which are already accounted for):
Click Federal Taxes (top menu)
Click Deductions & Credits (just below top menu)
Scroll down to Estimates and Other Taxes Paid and click Show More
Click Start next to Other Income Taxes