My wife and I are retired and lived in GA Jan - May and moved to TN in June where we reside now. We paid GA state income tax for the 5 months in GA and just TN state and local sales tax for 7 months in TN. We are getting a refund for the GA State income tax. When I did the TN state and local sales tax computation in Turbotax it was less than my GA state income tax refund. Turbotax Premier recommended using GA state income tax but said I could overrride and use TN state and local sales tax but my GA refund would not be refunded. Is this true?
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I think you may have misinterpreted that message. When you itemize deductions on your federal return, you can choose to deduct either 'State and Local income taxes paid' OR 'Sales Tax Paid'. It is an either/or situation for this 1 itemized deduction. No matter which you choose to deduct (generally, you take the largest), you will still get your state tax refund from GA.
I believe what that message was saying that is if you elect to itemize sales tax, you won't get the deduction for state taxes paid on your federal return. And this is true, but you will still get your Georgia state tax refund no matter which option you choose.
If you want to maximize your refund, choose the income tax deduction over the sales tax deduction if it is larger. And when you are calculating the sales tax, you can include sales tax paid in both states. So the comparison is total income tax paid in all states vs. total sales tax paid in all states.
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