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big_al
Returning Member

Why is last year's state tax refund NOT taxable (in Oregon)?

I entered the 2018 Total Tax Refunds amount that shows on the state of Oregon's 1099-G form, but TurboTax responds that "Your state and local tax refunds are not taxable" and it shows a zero amount.  This is not how it worked in previous years.

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3 Replies
MayaD
Expert Alumni

Why is last year's state tax refund NOT taxable (in Oregon)?

In general, if you didn’t deduct state and local income taxes last year, you don’t need to pay taxes on your state and local tax refund this year.

If you didn't itemize last year or if you deducted the sales tax instead of State and local income tax, your refund won't be taxable.

When you enter the 1099-G form and answer the questions, TurboTax will calculate the taxable amount.

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big_al
Returning Member

Why is last year's state tax refund NOT taxable (in Oregon)?

NONE of the replies to my question applied to my situation.  So, the answers were incorrect.  I am still looking for a correct answer.

KrisD15
Expert Alumni

Why is last year's state tax refund NOT taxable (in Oregon)?

It might work differently this year and here's why:

 

State refunds are taxable only if the person claimed Itemized deductions the previous year. 

 

The Tax Cuts and Jobs Act greatly increased the Standard Deduction. Many people who used to Itemize, now take the Standard Deduction. 

You could be one of those people. 

Look and see if you took the Standard Deduction on your 2018 tax year return. 

Now look back at previous years when the refund was claimed as income, did you itemize deductions the year before? 

 

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