I found out that I was overpaying Oregon state tax for years. When I enter the OR refunds in Turbo Tax for 2017-2019, my fed tax increases. Why?

I don't live in OR, but I was paying tax like a resident. When I found out, I had him refile and got refunds. Turbo tax asks about state and local tax refunds, so I entered the info. But my fed taxes go up when I do. I don't understand?

posted

did you itemize deductions in 2017 and include the OR taxes. then it's taxable because you got a recovery of an amount you took a tax deduction for. if you took the standard deduction you do not report it in Turbotax. 2018 and 2019 are the same? however, it becomes more complicated if your schedule A tax deduction was the maximum of $10,000 ($5,000 if MFS) and your actual deductible taxes exceeded that amount.