If the refunded amount in Box 4 is attributable to a prior year that you took an itemized deduction for, then it is included in income for 2016.
To report in income for this year:
- Select Federal Taxes
- Wages & Income
- Scroll to Less Common Income
- Select Miscellaneous Income (last item), start
- Then select Reimbursed deductions from a prior year
See attachment.