Is NYS Inflation Refund Federally Taxable & If So, How do you enter it?

[WendySnyc]

Does anyone have a definitive answer from the NYS or the IRS or TurboTax or an accountant as to whether the inflation refund is federally  taxable?  And if it is, is it only taxable under certain conditions? Finally, how do you report it?

[MonikaK1 · Accepted solution]

Because the special New York Inflation Refund is not a regular tax refund but a special payment that is taxable at the Federal level, you can report it in Other Reportable Income (instead of as a tax refund). In TurboTax Online:

1. From the left menu, go to Federal and select the first tab, Wages & Income
2. Add more income by scrolling down to the last option, Less Common Income, and Show more
3. Scroll down to the last option, Miscellaneous Income, 1099-A, 1099-C and Start
4. Choose the last option, Other reportable income and Start and Yes
5. Enter the applicable description and amount and Continue
    

If you need to subtract an item of income from your New York return that was included in your Federal return income, you can enter that adjustment in TurboTax Online at the screen in your New York return labeled "Changes to Federal Income".  

Look under Other New York Adjustments to Federal Income, and select Start next to Other changes (adjustments) to your federal income to make the subtraction entry.

[WendySnyc]

Thank you for your response.  I followed your advice.  I have seen so many different opinions about whether or not the refund is taxable and possible conditions determining whether it is taxable that my head was spinning. Ultimately, I finally decided to follow your advice and report the income as federally taxable.

Thanks again.

[jkt558385]

Thank you SO MUCH!  Yours was the only response that made sense and gave me the steps to take