How to report 1099G refund due to overpayment of state tax due

[Rvrsbw]

Hi, For 2017 California Taxes, my CPA asked me to over pay my state dues while filing an extension in 2018 which I did. So California FTB returned the excess amount X in 2018. But California FTB also sent me a 1099G for the returned excess amount X for 2018. Now when/where-ever I enter this 1099G X amount, Turbotax takes it as Income for 2018 and increases my Federal Tax for this amount X. To me this looks like I'm paying federal taxes twice on this amount X.  Can someone  pl. advice how to report this 1099G state refund appropriately so it is not double taxed? Thanks

[DawnC0]

After you enter the 1099-G, there is a series of follow-up questions that you will need to answer.  If you itemized last year, none of the state refund is taxable.  If you included the amount paid with extension as part of an itemized deduction for state and local taxes on your 2017 tax return, a portion or all of the refund may be taxable.  Your answers to the follow-up questions will determine if the amount is taxable.   Only if all three of the following are true, your refund counts as taxable income:

• You itemized deductions last year, instead of taking the standard deduction.
• You claimed state and local income taxes (not general sales taxes).
• Claiming the deduction helped you increase your federal refund or lower your tax bill.

Even when your refund is taxable, it may not be the entire amount. It depends on how much the deduction affected your refund or tax bill. Just answer a few simple questions about last year’s refund, and we’ll calculate the taxable amount for you.    Is My State Tax Refund Taxable and Why?