I did not claim my state income tax as a deduction last year. Why would I need to file a Schedule 1?

[DoninGA]

Schedule 1 is used for more than just taxable state/local tax refunds.
Do you have any other income or adjustments to income that would be reported on Schedule 1 - <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f1040s1.pdf">https://www.irs.gov/pub/irs-pdf/f1040s1.pdf</a>

[TaxGuyBill]

@DoninGA   Wasn't there a problem that the program was putting $0 on that line in some circumstances, thereby inappropriately triggering the need for Schedule 1?  Or has that been fixed?

[DoninGA]

Right.  There was an issue where the program would loop the user to upgrade to Deluxe if they entered a state tax refund and said they did not itemize.  That  problem was fixed.

[TaxGuyBill]

Thanks.

[Opus 17]

 Even though the bug was fixed, there is still an issue that I consider to be a design flaw. If you receive a state refund, TurboTax will tell you that it needs to ask you some questions to determine if the refund is taxable. Those questions trigger the upgrade to Deluxe.  If you did not itemize your deductions last year, the refund is not deductible this year, but TurboTax want to tell you this until after it runs the upgrade and then asks you the qualification questions, and at that point, you are stuck in the paid version.

If you receive the state refund in 2018 but you know it is not taxable because you did not itemize your deductions in 2017, you can say no you did not get a refund.  

[SteamTrain]

I ran thru it.....

1).The situation where you received a state Refund, but used Fed Std Ded the prior year was fixed.

2)  What is now broken (and I thought was covered previously) is if you itemized Fed, received a state refund, BUT used state sales taxes as the itemized deduction......then the State refund is not taxable this year.

Solution for the moment, is for the users in this particular situation to NOT enter their state refund at all.  Delete the state refund entry and ignore that section entirely.