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mytax26
Level 2

Taxes on State refunds - when you owed to one state and got refund from another.

In year 2021, my employer withheld taxes for VA even though I lived in GA.

While filing my taxes for 2021 I declared that I was residing in GA for the whole year. So I owed around $8000 to GA and I got complete refund from VA of around $6000.

My question is when I file for 2022 taxes do I have to declare that I got a refund of $6000 from VA even though I owed $2000 is total.  

1 Best answer

Accepted Solutions
rjs
Level 15
Level 15

Taxes on State refunds - when you owed to one state and got refund from another.

There is no Schedule A because you used the standard deduction. Since you took the standard deduction on your 2021 federal tax return, that means you did not claim an itemized deduction for state income tax. Therefore you do not report the state tax refund on your 2022 tax return. You will get a Form 1099-G from Virginia showing the refund, but just keep it with your other tax records. Do not even enter it in TurboTax.

 

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5 Replies
rjs
Level 15
Level 15

Taxes on State refunds - when you owed to one state and got refund from another.

On your 2021 federal tax return did you claim an itemized deduction for state income tax? If not, you do not report the refund on your 2022 tax return. You claimed an itemized deduction for state income tax if there is an amount on Schedule A line 5a, and the box on that line is not checked.


If you did claim an itemized deduction for state income tax, when you prepare your 2022 tax return you have to enter the refund amount on the Form 1099-G that Virginia will send you. TurboTax will use information from your 2021 federal tax return to calculate how much, if any, of the refund has to be reported as taxable income.

 

You cannot directly offset the Georgia tax that you paid against the Virginia refund. But if you itemize deductions for 2022, you will be able to claim a deduction for part or all of the Georgia tax that you paid in 2022.

 

rjs
Level 15
Level 15

Taxes on State refunds - when you owed to one state and got refund from another.

You said you lived in Georgia, but you didn't say where you worked. What state did you work in in 2021? If you worked in Virginia, your employer was correct to withhold Virginia tax, and you filed your state tax returns incorrectly. Any money that you earned for working in Virginia is subject to Virginia tax. Since you live in Georgia, all of your income is subject to Georgia tax, no matter where the income is from. You have to file a Virginia nonresident tax return and a Georgia resident tax return. On your Georgia resident tax return you get a credit for part or all of the tax that you pay to Virginia. You end up paying most of your tax to Virginia, and only a small amount to Georgia.

 

mytax26
Level 2

Taxes on State refunds - when you owed to one state and got refund from another.

Sorry I forgot to mention that I lived in GA and worked from GA (remote work)  the whole year. My employer was in VA so withheld VA taxes.

I filed my 2021 taxes using Turbotax and paid the Federal and GA taxes on all my income and got full refund from VA.

mytax26
Level 2

Taxes on State refunds - when you owed to one state and got refund from another.

I tried to search the tax return document which Turbotax software generates, but I can't find Schedule A.

I did find (12a) standard deduction or itemized deduction, which is filled with standard deduction amount of $12550 (I am single)

 

So even though I paid federal and GA tax on my complete income in 2021, I still have to show VA refund in my 2022 tax return?

Why do I have pay tax on VA refund even though my state(s) refund was actually in negative? 

 

Thanks for answering my questions.  

rjs
Level 15
Level 15

Taxes on State refunds - when you owed to one state and got refund from another.

There is no Schedule A because you used the standard deduction. Since you took the standard deduction on your 2021 federal tax return, that means you did not claim an itemized deduction for state income tax. Therefore you do not report the state tax refund on your 2022 tax return. You will get a Form 1099-G from Virginia showing the refund, but just keep it with your other tax records. Do not even enter it in TurboTax.

 

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