Turbotax used to ask "did you get the star exemption" and how much was it. I don't know if it still asks or not since I moved out of NY. But the answer did not flow to your actual tax return calculations, so you still have to follow the procedure below.
Technically, how you report your STAR rebate check depends on when you receive it.
If you received a check in 2021 for your 2021 property taxes, you reduce the amount of property tax deduction you claim by the amount of the rebate check.
However, if you received a check in 2021 for your property taxes you paid in 2020 or earlier, you would report the full 2021 property taxes you actually paid as a deduction, and report the rebate as a taxable recovery (reimbursement of a previous deduction) which is located in the other uncommon income section.
Most of the time, this won't actually make a difference. But sometimes it can. In particular, you apply the tax benefit rule toward taxable recoveries. If you did not actually deduct your property taxes in 2020 (maybe because your total itemized deductions were too small), then a rebate for 2020 that is received in 2021 is not taxable and does not reduce your 2021 deduction. Or, suppose your total itemized deductions for 2020 were $25,000 (the standard was $24,800) so you itemized because the standard was slightly larger. If your STAR rebate was $400, only $200 is a taxable recovery--you only got a tax benefit of $200 from the property taxes because if you consider the entire rebate, your itemized deductions would be $24,600 so you would use the $24,800 standard deduction instead.
As I said, its a technical point, and most of the time it won't make a difference, but that's what you are supposed to do.
