How shall I answer this question? Is the standard deduction typically for federal return?

[danilol]

I have state tax refund from 2023.  It is for overpaid income tax of 2023. I do not think the tax department will send 1099 form to people who have this kind of refund.  Because thousands of millions will get that refund after they done tax return through turbotax. So I am thinking something when I will work on tax return of 2024. 

In the federal deduction section, there is : other common income-- state tax refund-see picture below, just imagine 2022 is 2023.  I TOOK STANDARD DEDUCTION FOR FEDERAL IN 2023.  So here is asking for federal or state deduction?

I know if I take standard for federal then state will be standard, too.

But my 2023 NY state  take itemized for me automatically although I take standard for federal, I do not know why? see the picture 2. So what shall I answer here?

[DMarkM1]

The first page is asking about any state/local tax refund you received in 2023. After you enter the amount of the state/local tax refund you received, you are asked the question did you itemize your federal return in the year your are getting the refund for (typically 2022).  If you answer that you took the standard deduction on your federal return in 2022 then none of that refund amount will be taxable on your 2023 return.

However, if you answer that you itemized in 2022, then you will be asked about that prior return to find out if the amount of your refund affected your 2022 federal tax liability.  If it did some or all may be taxable income on your 2023 return.

Next, you are able to take the standard deduction on your federal return and still take itemized deductions on your NY return.  In the NY state interview in the "Income" section there are some deductions that are available in NY but not on your federal return that may make your NY itemized deductions higher than the NY standard deduction.  TurboTax will automatically calculate that for you and select the higher deduction choice. 

[danilol]

So the question in federal section  ask me whether I take standard deduction is refers to federal ? not for state tax, right? 

If I take standard for federal and itemized for state. I should answer" I take standard" here, right?

Thanks

[JamesG1 · Accepted solution]

The question refers to a Standard Deduction on the 2022 Federal 1040 tax return.

If  you claimed the Standard Deduction on the 2022 Federal 1040 tax return but itemized deductions on your 2022 state income tax return, you will select "I take standard".

The state tax refund for tax year 2022 is generally received in 2023.  There are instances where this state tax refund (or a portion of it) is considered taxable income on the 2023 Federal 1040 tax return.

The short test for whether the state tax refund is considered taxable income on the 2023 Federal 1040 tax return is whether or not the Standard Deduction was claimed on the 2022 Federal 1040 tax return.

See also this TurboTax Help.

@danilol 

[danilol]

got the point.

thank you.