Do I enter state income tax refund, even though I didn't have a Schedule A?

[DoctorWho]

I'm at the point in the TurboTax interview process, where I need to enter some miscellaneous income. Things like 1099-MISC, -NEC and -K. None of these apply to us.

However, we did get a state income tax refund in 2021. But we did not have a Schedule A in our income tax return last year (for tax year 2020). And there's a link on this page of the interview that says, "When would my state or local tax refund count as income?" I clicked on that link it brings a popup that says:

"Your state or local tax refund received in 2021 could count as income if you itemized your deductions in 2020. If you did this, your 2020 tax return would have a Schedule A. If your return doesn't have a Schedule A, then your state or local tax refund won't count as income."

Last year when I did our income taxes for 2020, TurboTax did not create a Schedule A. Therefore, given what TurboTax says here, I conclude that I do not enter the state tax refund we received in 2021. My question is, do I select the "No" button? Or do I select "Yes" and hope that TurboTax will see that we didn't have a Schedule A last year?

[Vanessa A]

You will select No.  If you did not have a Schedule A last year, your state refund is not taxable so you will not enter it on your return. 

[Phil999]

You can say Yes. It will work through it with you and determine that it is not taxable

[DoctorWho]

@Vanessa A I will select No, per your recommendation. I've looked over my income tax return for 2020, and cannot find a Schedule A. I presume that if I overlooked it, then TurboTax will inform me as I used TurboTax last year to do my 2020 income taxes.

[Vanessa A]

If you look at line 12a from your 2020 return, you can see if you took the standard or itemized deduction if you are still wondering.  If you took the standard, it will match the amount to the left of the number 12a in a text bubble for your filing status. 

[DoctorWho]

I'm sorry, I don't see what you're talking about. I'm looking at my 2020 income tax return. There is no line 12a. There is a line 12, which reads as follows:

Standard deduction or itemized deductions (from Schedule A)

Then immediately to the left of form 1040-SR there's a text bubble that says:

Standard Deduction

See Standard Deduction Chart on the last page of this form

Does that text bubble, with the text within it, mean that TurboTax used the Standard Deduction for 2020?

[BillM223 · Accepted solution]

"Does that text bubble, with the text within it, mean that TurboTax used the Standard Deduction for 2020?"

No, that is just stuff preprinted by the IRS to help you understand the number on line 12. Unfortunately, since you are a senior, your Standard Deduction probably won't match the numbers on the left, because we seniors get some additions to the Standard Deduction - take a look at Table 7 on page 24 at this IRS booklet.

However, if you had no Schedule A in your return, then you almost certainly took the Standard Deduction (something like 90% of taxpayers do now).

This being the case, take Vanessa's advice and just select NO.

@DoctorWho