The only thing that looks odd is that a state we used to live in is still listed on both of our returns yet we've never filed this year I was able to delete that out completely while her still had it listed. Could that be driving the issue somehow even though she never filed a New Jersey return last year and only did it in the state of Utah where we live?
so your wife is filing either as married filing separately which would require you to also use the standard deduction or she qualifies to file as head of household.
you are correct that if she used the standard deduction in 2020, any refund for that year is not taxable.
might be a bug in Turbotax.
Yes we're married filed separately and everything I've read said that this shouldn't be there. We're going to remove it I just find it surprising when you do your taxes on the same platform for years somehow it would it would make this kind of mistake and not have any clarifying questions to ensure they're correct. Thanks for the reply!