2025 Fed taxes / 2024 State Income Tax paid in 2025 / 2023 State Income Tax paid in 2025 - Deductions and Credits question

[Priller]

Filed 2023 and 2024 State Income tax Returns in 2025.

Paid State income tax for both years but received a Sate Refund for both years as well.

Used TurboTax for both 2023 and 2024.

Just transferred data from my 2024 TurboTax file to my 2025 TurboTax.

2025 State Refund Wks Part I - State and Local Income Tax Refunds from 2024 Tax Returns shows State, Refund Amount, and Total Payments and Withholding.

Also, I manually entered State and Local Income tax Refunds for All Tax Years for 2024 and 2023 in Table above Part I.

Wondering if I should complete Section 7 of Deductions & Credits, Estimated and Other Taxes Paid, specifically the Section titled "Other Income Taxes/Other Income Taxes Paid in 2025" - "Balance due on your 2024 state taxes paid in 2025" and "Payments for 2023 or a prior year state or local income taxes paid in 2025"

I did it once and it added $824 (2023 State taxes paid when I filed my 2023 State Tax Return - paid in 2025), and $535 (2024 Sate taxes paid when I filed my 2024 State tax Return - Paid in 2025).

However, it appears 2025 TurboTax thinks I paid $535 in 2024 State Taxes because it adds this amount as a payment after Dec 31, 2024, in the 2025 State Refund Wks Part I - State and Local Income Tax Refunds from 2024 Tax Returns.

very confusing indeed... Help please 🙂

[PatriciaV · Accepted solution]

Did you itemize your deductions in 2023 and 2024? If not, your state tax refunds are not taxable income for federal purposes.

If you used TurboTax to prepare your 2024 return, your 2024 federal and state tax payment and refund information transfers to 2025, and, in most situations, the program automatically computes the taxable refund amount. In this case, you would not make any additional entries for the 2024 payment or refund. The software handles this whether you itemized or not.

If you itemized your deductions in 2023, you would need to manually calculate the taxable amount of the refund to enter on the State and Local Income Tax Refund Worksheet Part VII. You may wish to see IRS Publication 525, Taxable and Nontaxable Income, for information about how to recalculate a prior year's tax and for related examples. Or you can choose to omit this step by claiming all of the refund as taxable. Again, if you didn't itemize, the refund isn't taxable.

For tax year 2025, if deductions are itemized on Schedule A, the prior year state tax payments will be included, as state and local taxes that were paid in 2025. However, if the refunds you received are not taxable, you may wish to omit these payments from your 2025 return since you received the benefit of the deductions on the returns filed for each year.

[Priller]

Thank you for your reply PatriciaV.

 FYI, I did not itemize in 2024 and you're correct regarding the transfer of my 2024 TurboTax info to my 2025 TurboTax income tax return.

However, I did receive a 1099-G from the State in February of 2026 showing the 2023 Refund - $2800. How do I report/include this 1099-G in my 2025 Income Tax Form in TurboTax?  Note - I claimed the Standard Deduction both for the Feds and State in my 2023- and 2024-income tax forms, which I filed in 2025.

[PatriciaV · Accepted solution]

For a tax year 2025 Form 1099-G, report this payment per the instructions here: Where do I enter a 1099-G for a state or local tax refund?

TurboTax will help you determine if this is taxable income on your return.