Last year I owed (and paid) a lot of NYC Unincorporated Business Tax at tax time (thanks to income fluctuation). I made the payment online and due to a tech error on the payment platform, the payment went through twice. I requested to have the second (duplicate) payment refunded. Now I've received a 1099-G reporting the refunded amount as a state tax refund, which I guess it is.
How would I correct this? It doesn't seem logical that I should owe income tax on this when it is offset by the original overpayment.
Do you mean, log the 1099-G as a taxable state refund, but deduct both payments as business expenses on the Schedule C?
If this was a refund of taxes you paid in, then this is not taxable income as long as you did not itemize your deductions last year and take a deduction for the amount of the refund. If you took a deduction for all of the taxes you paid, then it could be taxable.
All you need to do is walk through the steps to enter your 1099-G and then TurboTax will ask you questions to determine if it is taxable and if so, how much of it is.
To enter the 1099-G select the following: