Discrepancy in State refund amount on 1099-G?

[Daboa]

Hi, I'm in the "Refunds Received for State/Local Tax Returns" section. I received a Colorado state tax refund last year after filing my 2023 taxes. Turbotax has prefilled the amount of the refund I see on my 2023 "Colorado Individual Income Tax Return" form. However, I received a 1099-G from Colorado and the "State Income Tax Refund" amount listed in Box 2 is much less than the amount I actually received (as seen on my 2023 return and my corresponding bank deposit). Box 3 confirms this is for the 2023 tax year.

So which amount do I put? The amount that was actually deposited to my bank or the amount on the official 1099-G from the state? And why would they be different?

[VolvoGirl]

First let’s see if you need to enter a state refund.  A State Tax Refund is taxable if you itemized deductions on that prior year's federal return and took a deduction for state income taxes instead of the sale tax.  You got a deduction benefit for it so now you have to include it as income. If you took the standard deduction it is not taxable and you don't need to report it.

if you need to enter it you can change the amount to the 1099G.   

Federal on left

Wages & Income

 Scroll down to 1099-Misc and  Other Common Income

     You might need click on Show More to expand the section

Then it's the first line for Refunds Received for State/Local Tax Returns - Click Start

     You do not want the next line that says Other 1099G Income

On the first screen check YES - Received a State Refund.

[Daboa]

Thanks for the reply. I can confirm that last year I itemized deductions and used my state income tax, not state sales tax in itemization. But I still don't understand why my 1099-G would be different than the amount I received.

I'm wondering if there is a portion of my refund that is not subject to federal income tax to account for this difference. For example, Colorado has a TABOR refund that, based on my Googling, looks like it wouldn't be taxed by the IRS but would have been part of the money received in my state refund last year. However, if I subtract this amount from what I received from the state last year, the result is less than what I see on my 1099-G, so I'm still uncertain and confused.

[Daboa]

I just deleted my state refund and went through the wizard to add it again. I used the amounts on my 1099-G. The wizard asked me if I itemized deductions and if anyone else claimed me a dependent (no) for my 2023 taxes. It then asked me to confirm 2023 federal return info, which I did. Finally, the wizard said, "Good News, your 2023 refund is not taxable." So I guess it's not taxable! 

[cbco7]

@Daboa Same situation as you, higher refund amount on the  2023 return vs. a lower 1099-G amount. The difference was exactly equal to the amount on line 34 of the 2023 state return, "State Sales Tax Refund". It is related to TABOR. 

References: 

https://tax.colorado.gov/sites/tax/files/documents/ITT_State_Sales_Tax_Refund_Jan_2025.pdf 

https://coloradonewsline.com/briefs/colorado-irs-tax-tabor-refunds/  

Also, thanks for posting your question, just started my return and it was a little discouraging to face an issue so soon. Your posts and @VolvoGirl's post saved me a lot of time chasing down the answer 🙂

[hofmannchriss]

Hi together,

just facing the same situation. 1099-G amount is way less than the real refund I received.

Question: How can I find out if I itemized on the 2023 CO state tax return so I can be sure to answer the questions correct?

Thank you

Chris

[KrisD15]

If you received a 2023 Tax Year Colorado state refund in 2024, you want to look at your 2023 tax year FEDERAL return to see if you itemized deductions.

The easiest way is to look at your 2023 Federal 1040 line 12. 

Does it report the 2023 Standard deduction or Itemized?

The standard deduction for married couples filing jointly for tax year 2023  was $27,700

For single taxpayers and married individuals filing separately, the standard deduction was $13,850 

For heads of households, the standard deduction was $20,800 for tax year 2023

Also if you Itemized Deductions, your return would include Schedule A.

I'm also guessing that what you remember getting as a state refund included TABOR refunds and the state is not including that on the 1099-G. 

@hofmannchriss

[hofmannchriss]

@KrisD15thank you for the fast reply.

I just checked my 1040 line 12 from 2023 and it shows the standard deduction amount for married filling jointly of $27,700

that means I do not have to declare it as income and can just file the from away.

Yes, the total refund did included the State Tax Refund. Somehow the numbers on the CO tax return form 2023 are not matching with the amount now stated on the 1099-G, no matter how I add/substract the numbers. 

As I do not have to include it in the 2024 tax return, I would not further investigate here 🙂

Thank you a lot @KrisD15 and @VolvoGirl for your answers, and @Daboa @cbco7  for opening and adding to the chat.

Happy Springbreak Week

Chris

[cbco7]

@hofmannchriss 

"Somehow the numbers on the CO tax return form 2023 are not matching with the amount now stated on the 1099-G, no matter how I add/substract the numbers. "

I realize you have the answer to your question about itemizing vs. taking the standard deduction, so this add'l information doesn't apply. However, if you're still curious about the amount on your 2024 CO 1099-G that was reported as your 2023 tax refund in Box 2, the calculation is as follows:

Form DR0104 (2023 CO Individual Income Tax Return)

Line 38, "Refund" MINUS line 34, "State Sales Tax Refund".

Note that if you made a contribution to any of the charities listed on the 2023 Voluntary Contributions Schedule, line 18 of that form will show your total net refund, in other words, the refund amount you actually received after your contributions were paid out of your total refund. Not sure if this is what caused your calculation discrepancy, but hopefully if you use the total refund amount on line 38 of form DR0104 in the calculation above, it will match the 2024 CO 1099-G amount reported for tax year 2023.

Note also that every year or so Colorado has had to defend to the IRS why it deducts the Tabor amount when it reports the total refund amount on the 1099-G, so if at some point you do itemize on Schedule A of your federal tax return, you may want to check the income tax section of the state's website to see if it's still the case.  (Also, see the links in my earlier post above.)

Hope this helps 🙂

[EVAN23]

I'm new here.  I followed the thread, but am missing something. 

I did itemize in 2023.  Like others my actual refund was much more than 1099-G. 
As Deboa suggested, I deleted my actual amount and entered the 1099-G amount, but it did not ask any questions and just took the entry. 

So, how do I correct, or do I just leave it as the lower 1099-G amount or put in the much higher actual amount. 
Thanks. 

[EVAN23]

Sorry - looks like it eventually did step me through the questions - my apologies.  

[KrisD15]

Glad to hear it. 

Thank you for using TurboTax.