In filing my 2021 1040 I am asked for my 2020 state refund amount. Then TT asks if I took the standard deduction in the prior year, which I did. It then asks if I have another state refund. I do have - three, actually (because of late filings). They are 2019, 2018, & 2017. When I then fill them all out individually, TT does not ask me if they each had taken the standard deduction in prior years, which they had done.
I received all four refunds in the same year, 2021. Does the standard deduction for the most recent year then apply to the remaining three since they all were received in the same year?
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No, taking the standard deduction for 2020 year does not apply to the state refunds for other years. What matters is whether you took the standard deduction on your federal tax return for the year that the state refund is for. For example, whether you have to report your 2019 state refund as income depends on whether you took the standard deduction on your 2019 federal tax return. But if you took the standard deduction on your federal tax returns for 2017, 2018, 2019, and 2020, none of the state refunds for those years have to be reported as income. You don't even have to enter any of the state refunds in TurboTax, because they will not appear on your 2021 tax return.
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