How do I enter State Tax owed in TurboTax? It automatically enters the State Tax paid in Sch A, which makes my refund taxable next year.

[KrisD · Accepted solution]

You can't claim what is owed, only what was paid. You can claim state sales tax in lue of state income tax withholding. (Schedule A line 5b rather than Schedule A line 5a) The result would be that the state refund will not be taxable next year, however the sales tax may not be as large of a deduction as the state income tax would be. 

The idea is this: last year you claimed XXX in state tax withheld on your federal taxes, but got XX back as a refund, so now you need to report that XX as income.