Bug with State and Local Income Tax Refund Worksheet 2021 in TurboTax

[SallyP]

Line 27 and Line 30 of the State and Local Income Tax Refund Worksheet are blank when I believe they should have a figure there that will impact my taxable income. The purpose of this worksheet is to determine whether your State Income Tax Refund should be counted as income. I itemized my deductions last year and claimed the full amount of State income taxes withheld. Since I got a refund of some of that State income tax, this worksheet looks to see if that refund would have impacted my total tax owed had I not claimed it, and if so, then the amount of the refund that would have impacted your tax owed gets counted as income this year, so they can tax it. On line 27 of the worksheet, it is supposed to recompute your tax before credits and line 30 recomputes the tax after credits assuming you only claimed the actual State income tax owed instead of the full amount withheld. Then it compares whether the State tax that you claimed last year that got refunded had an impact on your taxes last year or not, and if so, how much, so you know how much you need to count as income this year. In years past, those lines 27 and 30 were filled out by TurboTax. This year, the form is filled out, but those lines 27 and 30 are blank. I read through the 1040 instructions on the IRS's website, and I think I've properly calculated the figures that belong there, and it has a significant effect on this year's return.  Am I the only one having this problem? Is there an easier way to get to someone at TurboTax who can help other than waiting through the hold time in the general queue? 

[SallyP]

In trying to sort this out, I decided to try running my return through Jackson Hewitt and FreeTaxUSA and they both concluded that I do not need to include the refund in my taxable income, which is what I also think should happen when I fill in lines 27 and 30 on the "State and Local Income Tax Refund Worksheet". 

More importantly, when you read page 85 of the 1040 instructions, the comment at the top of that page, it says "Before you begin:  Be sure you have read the Exception in the instructions for this line to see if you can use this worksheet instead of Pub. 525 to figure if any of your refund is taxable."

 I read the exception for the instructions, which are on the previous page (84), about Taxable Refunds, Credits, or Offsets of State and Local Income Taxes, which states this exception that applies to me: " Exception. See Itemized Deduction Recoveries in Pub. 525 instead of using the State and Local Income Tax Refund Worksheet in these instructions if any of the following applies.... 4. Your 2020 state and local income tax refund is more than your 2020 state and local income tax deduction minus the amount you could have deducted as your 2020 state and local general sales taxes."  In this case, I shouldn't even be using the State and Local Income Tax Refund Worksheet.

So, Pub 525 has me use a Worksheet 2a and when I complete that (using the IRS's Sales Tax Deduction Calculator), and according to the Worksheet 2a, my refund is not taxable. 

Somebody tell me there is a higher-up person I can talk to at TurboTax who can settle this. The general help desk wasn't even able to find these worksheets in my return, much less answer questions about them. I tried sending a Facebook message to TurboTax and that person asked for screenshots and then said to call the help desk. I called again and waited on hold for an hour and then the hold music just stopped. I paid to upgrade to get Live help, called back and spent over an hour with someone who was not able to even see these worksheets, she could only see the TurboTax screen I see. She chatted with a supervisor who gave simplistic answers and did not seem to hear the part about the exception. Supposedly, and Enrolled Agent is going to call me back in 24-48 hours. Hoping that call comes before I have to file an extension. I think if I can't get this sorted with TurboTax, then I will just delete the 1099-G and if I get audited, I have the worksheets filled out properly to show them.