On 2017 return, Turbotax chose itemized deductions and didn't carry my state refund to Line 10. IRS says I failed to claim income reported on a 1099-G. Is that right?

[thomfam]

I've filed Itemized through TT for 5 straight years.  Only on my 2017 return does my state refund not appear on Line 10 as taxable income.  How do I make it appear there?  I need to amend my return.

[pk]

Once a 1099-G is entered, TurboTax  uses the state refund amount to calculate the recovery amount  ( i.e. the taxable amount ) and puts that on form 1040.  The taxable  amount is impacted by whether you used standard deduction for the year that generated the refund ( i.e. in your case 2016 return ).   It does not have anything to do with  type of deduction for the current year ( if that is what you meant).  IRS would have had a copy of the 1099-G for the year  ( 2017 in your case).

Did I understand your situation correctly or am I in dark ?

[thomfam]

I think you've got it, thanks.  But looking back 5 years I've used itemized deductions every year, and that was the only year for which Turbotax didn't put the state tax refund amount on Line 10.  Is there something else it looks at as well?

[VolvoGirl]

Did you enter the 1099G?  Maybe it showed up on another line?  Check all the other lines on your 1040 and any schedules it filled out.  Or you answered a question wrong and said you took the Standard Deduction.

[pk]

it looks at your filing status, your AGI for the year, sales tax for the state at your AGI , standard deduction for your filing status and from all of this calculates the advantage that you got by using the higher amount of state withholding and hence the amount of recovery to neutralize the advantage. There should be worksheet that calculated this. If that shows an amount to be recovered and TurboTax did not transfer that  to form 1040, then there is something wrong in TurboTax, If the worksheet called out for zero recovery, then send that to the IRS and have them explain why they think it is wrong.