Enter each tax year separately under the Form 1099-G topic (use the search tool). You'll need to know how much total state income tax you paid each year (from your prior year tax return). Note the exceptions below.
Your prior-year state or local tax refund may be taxable if you took the state and local income tax as an itemized deduction in the prior year and you benefited from the deduction (i.e., it increased your refund or lowered your taxes due.)
On the other hand, your state/local tax refund won't be taxable if:
- You took the standard deduction in the prior year; or
- You itemized and took the sales tax deduction (instead of the state/local income tax deduction); or
- Last year's tax return was subject to the Alternative Minimum Tax (AMT) and the amount of last year's state or local tax refund was less than the amount disallowed under AMT.
When you enter your state or local tax refund (usually reported on Form 1099-G), TurboTax will help you determine if it's taxable income.
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