Do I need to report my NYS refund for 2017 if the refund went back to the state because of a previous state liability?

[KatherineC · Accepted solution]

Yes, you do need to report the refund even though your refund was applied to your previous state liability.

The refund may or may not be taxable to you, depending on your prior year deductions.

The amount that was paid with your refund, could be partially deductible, depending on what state liability is paid. 

• If it is prior year state income tax, any portion that is not interest and penalties can be claimed as additional state income tax paid in the year it is paid.  
  
• If it was student loan payments, the portion of the payment that was interest could be deducted.
• If it was back child support there is no deduction.  
• If the payment was some other liability, most likely there would be no deduction.