NYS inflation refund check problem

[rclksr]

I efiled my NYS return on February 4, 2026. No error message appeared complaining of the NYS inflation refund, it said my NYS taxes were accepted. I am still waiting for NYS to process my return but there is no date on the process. I now find out intuit was missing the section for the NYS inflation refund and this is causing delays with turbo tax filing. I checked my desktop software today 3/6 and there still is nothing about the NYS inflation refund under credits. Should there be a mention of the NYS inflation refund in the desktop software? What will I need to do now that my NYS return has already been efiled?

[DoninGA]

That NYS refund is not taxable on a NYS tax return so there was nothing to enter concerning this refund on the state return.

[rclksr]

I would agree, but it turns out Turbo Tax did not properly account for the 2025 refund, which according to intuit they corrected and is now accounted for now with a patch somewhere between February 4th and February 12, 2026. I filed before the issue was corrected, and now the return is stuck in some kind of processing loop. My first question is will there be anything I need to do now that is has been filed? The second question is where would I see the change that was made?

[Danashax]

Yeah like what's the hold up.  Didn't they just get sued last year; they still not complying? Like why wasn't this token care of before...

Next year, I'll be filing with someone else after 10 years SMH.  I hope this is resolved soon because Im a loyalcustomer even after they had a lawsuit now they're giving me reasons to switch tax preparers next year. .

[law1085]

Same happening here.  After originally getting rejected because of this little snafu - all about money I did not ask for by the way - it was corrected via the software and eventually accepted a few days after.  Now, over a month later I log in to NYS Dept. of Finance to inquire what's taking so long, and it appears that they are requesting additional information.  Seeing as though none of the information they have is matching what is on my return (when I try to access my DOF account), I assume it's linked to this somehow since I've literally never had an issue until now.  Very disappointing if it turns out the onus lands on ITT.

[walterczw0]

I used turbo tax and filed my NYS return on 2/12. Do I need to refile?

[MarilynG1]

If you open TurboTax and let it update and check your New York bottom line, if it has changed from your original filing, you could Amend your NY return.  However, I would wait until NY has finished processing your return to do so, in the event they correct the error.

Click the NY link to check the status of your return.

@walterczw0 

[rclksr]

The problem is NYS is not processing these early filed returns, since TurboTax had an issue with their software. They did not update the software till after I had already filed. Intuit says this is a NYS issue, and NYS says Intuit did not have their software correct so they are not looking at these returns. The sad part is that the "Inflation Reduction" check that was issued by NYS and Intuit did not include in the software is not going to change the refund at all. I'm not sure how to check that anything has even changed.

[DianeW777]

The following steps can be used on your amendment if you are filing one for the New York State (NYS) inflation rebate.

Do not enter it as Other Income directly or it will not be reflected correctly on both the federal and NYS return.

The following steps should help with the answers when entering the New York State (NYS) inflation refund check. By using the steps below it will be subtracted from your NYS income and taxed to federal as required.

STEP BY STEP – NY INFLATION REFUND CHECK IN TURBOTAX (1099-G)

1. Open your return in TurboTax > Select Federal > Wages & Income > Other Common Income >
2. 'Refunds Received for State/Local Tax Returns' > Add or Revisit
3. At 'Did you get a state or local tax refund in 2025?' click YES OR on the Summary screen select Add more refunds
4. When asked about the refund you received in 2025, enter the following:
   • State: New York
   • Tax return year: 2023
   • Payments and withholding: 0 (be sure to enter the zero)
   • Refund amount: enter full amount you received or ONLY YOUR SHARE (half if MFS)
   • Continue.
5. On the screen 'Let's check if your 2023 New York refund is taxable' >'Does either apply to your 2023 New York return?'
6. Even though you took the standard deduction, select: NO (this is not a regular state refund-- Note: TurboTax will include it as taxable on your federal return while subtracting it from NYS correctly.)
7. 'Tell us the taxable amount of your refund' Enter the dollar amount of the refund > Continue
8. When the federal return is complete, go through your state return, then you can preview each return.

If you would like to preview your form you can use the steps below. (Form 1040, Line 8z-Other Income). 

IT-201 will show the subtraction from NYS income.

From the left rail menu in TurboTax Online, select Tax Tools (You may have to scroll down on the left rail menu.)

1. Select Tax Tools
2. On the drop-down select Tools
3. On the pop-up menu titled “Tools Center”, select View Tax Summary 
4. On the left sidebar, select Preview my 1040 

For TurboTax Desktop, change to 'Forms' and review the forms.

Use the instructions here to amend your 2025 tax return: Amend a tax return for the current tax year

@rclksr 

[jengakatz]

I followed your instructions. I put $400 for refund received, $400 for taxable amount, and $516 for total payments. In the Final Review it gives me an error: 

Check This Entry: State Tax Refund Worksheet: Payments and withholding must exceed sum of individual payments. It looks like the total amount you entered from your 2023 NY tax return is less than the individual payments you made that year (estimated tax, extension payment, or payment when you filed your return). It should be higher than, or at least equal to your payments...."

I do not understand this at all. Can you please explain? Thanks!

[DaveF1006]

It depends. When you tell TurboTax you received a refund for a prior year (2023), the software expects the Total Payments you made for that year (withholding + estimated payments) to be greater than or equal to the refund you received. In your case:

• You entered: $516 for Total Payments. 
• You entered: $400 for the Refund (Inflation Check).
• The Conflict: While $516 is technically more than $400, TurboTax is likely adding that $400 to any other state refund you might have already reported for 2023. If the sum of all "refunds" for 2023 exceeds $516, If the "Payments and Withholding" field doesn't match up with the "Taxable Amount," the system will flag it.

The instructions you followed suggested entering a 0 for payments, but since you entered $516, the system is now looking for a perfect mathematical match. To bypass this error while still ensuring the income is taxed federally but subtracted from NYS, try this:

1. Match the Payments to the Refund: If the error persists, change the Payments and Withholding amount for that specific 1099-G entry to match the Refund Amount exactly ($400). This tells the software: "I paid in $400, and I got $400 back." This usually satisfies the "Check This Entry" validation because the refund no longer exceeds the payments. 
2. Verify the "Taxable Amount" Screen: Ensure that on the screen titled "Tell us the taxable amount of your refund," you have entered the $400. This is the trigger that puts the money on your Federal 1040 (Line 8z) as "Other Income."

Check for Duplicate 1099-Gs: Go back to the Refunds Received for State/Local Tax Returns summary screen. Ensure you don't have two separate entries for the same 2023 NY refund—one for your original refund and one for this inflation check—that combined are exceeding your total 2023 tax payments.

Before you file the amendment, check these two spots to make sure it worked:

1. Federal Form 1040, Schedule 1, Line 8z: Should show $400. 
2. NYS Form IT-201, Line 25 (Standard) or 29 (Itemized): Should show a subtraction for this amount (often labeled as S-138 or included in the refund subtraction logic) so you aren't paying NYS tax on NYS's own rebate.

The reason why all of this is confusing is that state refunds are only taxable if you itemized the previous year. However, NYS Inflation Relief checks are unique: the IRS considers them taxable income for everyone (Federal), but NYS law says they aren't taxable for the state. When you enter it as a "State Refund" and mark it as "Taxable," you're using a workaround to make sure TurboTax reports the numbers correctly.

[ginaf0914]

I still do not see any change regarding an area to put the NYS refund check in for JUST federal taxes. When I put it in as "other income" or "miscellaneous"  it automatically includes it in my federal and state income and taxes it for both. Has anyone figured this out? 

[ginaf0914]

Thank you so much! this clarified everything for me! 

[jengakatz]

Thanks for getting back to me on this. When I entered $400 for total payments and withholding it cleared up the problem on my federal return. But now I am getting an error on my New York State Schedule 1 State and Local Income Tax Refund Worksheet, where it is saying that my payments and withholding must exceed the sum of individual payments. What number should I put there for payments and withholding? Is it ok if it's a different number from the $400 I put on my federal return? I am also concerned that this NY State worksheet now says that I had a 2023 taxable refund of $400 since I should not be paying state tax on this refund. Please help! Thanks!

[DaveF1006]

It depends. The error "must exceed sum of individual payments" means the software sees a discrepancy between the manual entry you made ($400) and the actual data pulled from your 2023 tax records.

1. The Solution: You should enter your actual total 2023 NY State tax payments (withholding + any estimated payments) in that field, rather than matching it to the $400. 
2. Why? As long as your total 2023 payments (e.g., $2,000) are greater than your total 2023 refunds (Original refund + $400 Inflation check), the error will vanish.
3. Is it okay if it's a different number? Yes. In fact, for the State return, it needs to be the accurate total of what you paid New York in 2023 to satisfy the software's audit check.

2. Ensuring the $400 isn't Taxed by NYS

You mentioned that the worksheet shows a “taxable refund of $400.” In tax terms, “taxable” usually means it’s subject to federal tax. Since you live in New York, the software automatically includes that Federal "Other Income" on your state return. We just need to remove it from your state filing.

To ensure you aren't paying state tax, verify these two spots in your New York State return section:

1. Look for "Subtractions from Income": Navigate to the NY State taxes section and look for a screen titled "Changes to Federal Income" or "Subtractions from Income."
2. The S-138 Subtraction: You are looking for an entry for NYS "Other" Subtractions. You should be able to select a code (often S-138 or simply "State Tax Refund") to subtract that $400. This ensures that while the $400 is added to your Federal Adjusted Gross Income (AGI), it is subtracted before NY calculates your state tax.

Let us know if this helps!!

@jengakatz