760PY INC: State refund received by taxpayer while a Virginia resident should not be greater than the total amount reported on federal return.

If you received a state refund, that refund should not be more that the amount of tax you claimed on the prior year return if you itemized deductions on the prior year Federal return. 

If you used the Standard Deduction on your Federal return the prior year, the state refund is not even reported on your Federal return this year. 

If you Itemized Deductions on your prior year Federal return, the amount of state income tax you claimed can't be more than the refund (how can you get a "refund" for more than you paid?"). If you Itemized and claimed state SALES tax (rather than state income tax), again, the refund is not reported. 

I am also getting similar error while preparing return. How do we solve the issue? I am putting the same amount that is reported on Federal return for state refund but the error does not go away. 

Make sure it was entered on the correct section with form 1099-G

On the Your income screen, select Add more income. Look for the Other Common Income section and select Show more. Select Start on the Refunds Received for State/Local Tax Returns section. Enter your refund amount.

You can follow the instructions that dgonzalez8 provided to check your 1099-G state refund amount.  In addition to checking what was entered for the 1099-G, you want to verify if you itemized or claimed the standard deduction for the prior year.  If you itemize, your tax refund may be taxable.  However, if you claimed the standard deduction, it is not taxable and, therefore, not listed on your Federal return.  Suppose you attempted to put your refund amount in when you claimed the standard deduction. In that case, it will give you an error: "State refund received by the taxpayer while a Virginia resident should not be greater than the total amount reported on the federal return."  Since you claimed the standard deduction, the refund was not taxable and, therefore, not listed on the Federal Return. 
 

@cc943785

I am facing the same issue. I did what dgonzalez8  suggested and I had chosen Standard deduction.

It is giving me an error- State refund received by the taxpayer while a Virginia resident should not be greater than the total amount reported on the federal return

How do we get around this?

If you claimed the standard deduction on your federal return, the state refund is not taxable.  To fix this, you will want to make sure you are not claiming the refund amount on your state return.  It should be listed as $0 or left blank.  To verify this section in TurboTax, you can follow these steps:

1. Click State Taxes on the left-hand panel
2. Click Edit next to Virginia
3. Click Income
4. Click Done with Income
5. Click Continue on the "How Virginia Handles Income or Part-Year Residents" screen
6. On the Part-Year Allocation screen, verify the State Income Tax Refunds do not exceed Federal Total.  If you took the Standard Deduction, this amount should be $0

See the screenshot below of where to correct Part-Year Allocations:

@sachin9

[Edited 02/09/23 | 8:02 am PST]

Thanks! That helped!