Massachusette tax refund - how to handle it?

[Tax2019Pay]

How do one handle Massachusetts 62F tax refund issued in 2022 for tax reporting in 2021?  Does recent IRS rule mean that one does not need to report it on Tax Return?

[ErnieS0]

Your Massachusetts 62F tax refund may or may not be taxable and reportable to the IRS depending on your 2021 tax situation.

Generally, it will be included in income if you itemized deductions in 2021 just like any other state refund.

IRS says

If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied) the payment is not included in income for federal tax purposes.

Payments from the following states in 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted.

• Georgia
• Massachusetts
• South Carolina
• Virginia

IRS issues guidance on state tax payments to help taxpayers

[Tax2019Pay]

For the 62F tax refund, if one takes standard deduction, it will not need to reported in Turbo Tax.

For the normal tax refund for MA state income tax return, it will need to be reported in Turbo Tax.

Correct?

[Tax2019Pay]

where you highlighted in bold, what is considered as "tax benefits" in Massachusette?

[RobertB4444]

Correct.  You don't need to report the 62F unless you deducted the taxes that you paid to the state on your federal tax return by itemizing your deductions.  If you took the standard deduction you did not receive a direct tax benefit for having paid taxes to the state so you do not need to include it on your return.  That's what the highlighted text is referring to as well - the tax benefit of itemizing deductions on your federal return.

@Tax2019Pay 

[monomoy2000]

Thank you for the insight on this MA 62F.  In 2021 I itemized and was not over the 10K limit.  MA says I do not need to pay taxes on this refund under 62F BUT I do need to pay Federal.  Where/how does one enter this 1099G under the federal forms so that it does not propagate to the state forms?