Does state tax overpayment applied to following year's estimated state tax count as federal income for that following year when no refund check was actually issued?

[Laura R]

Wondering if there's a distinction based on whether I took possession of the funds.  If not, seems like there should be.

[Laura R]

Got it.  Thanks so much for your speedy response!

[Rainman12 · Accepted solution]

If you take an itemized deduction in one year for State taxes paid, and that money is refunded or used in a later year, then that money is taxable. If used to pay State taxes, then taxable amount = deductible amount, so there is no actual difference after all calculations are completed ...

[Laura R]

Thank you.  This was actually clarified later in Turbo Tax.  I just hadn't gotten to that part yet.  I appreciate your help!

[Rainman12]

You're quite welcome! ...