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If you received a state tax refund for tax year 2020, you would have gotten that refund in 2021.
The refund, or part of that refund MAY be taxable income for your 2021 Federal Return.
If you took the STANDARD DEDUCTION (rather than itemizing on Schedule A on your 2020 Federal return), as most people did, the refund is not taxable and you needn't enter anything about it. You can tell the program "no" you did not get a refund since it is not needed. (Check your 2020 1040 line 12.)
If you DID Itemize Deductions (on your 2020 tax year federal return), you'll need to enter any state and/or local refunds you received in 2021 for tax year 2020.
It will be the same next year. THIS year if you take the Standard Deduction on your Federal 1040, any state refund you get back in 2022 WON"T be taxable when you do your 2022 Tax Year Federal return next year.
I understand WHY Turbo Tax asks the question, but my 2020 state refund was less than the January 2021 estimated tax payment and Turbo Tax is classifying part of the refund as taxable, even though it was not included in the SALT deduction on the 2020 Tax return. As a cash basis taxpayer this calculation appears completely erroneous.
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