No, unemployment has nothing to do with the state refund... it sounds that you are in the wrong section... please refer to the steps below for data entry. Also, you should report 1099-G showing the tax refund on your tax return, but you will be taxed on it ONLY IF you have itemized deductions last year. If you didn't itemize them, you don't need to enter it. If you are not sure, enter the amount and the program will help you determine if you will be taxed.
Here is data entry:
- Federal Taxes
- Wages & Income
- Scroll down to Other Common Income
- Select State and Local Tax Refunds on Form 1099-G