Prior Year State/Local Tax Refunds Included in Income

[Yosal1958]

Using TurboTax 2019 Home and Business.  Input state/local tax refunds for 2016, 2017 and 2018.  2018 refund is excluded from 1040 income after I responded to prompt confirming use of standard deduction in 2018.  This prompt was not received for 2016 or 2017 so the refunds are included in income (even thought I took the standard deduction).  Anyone else experiencing a similar issue or can provide an explanation on how to resolve?

[AmyC]

If you filed using standard deduction for those years, delete the refunds. They do not go on your return, it is just for the worksheet to use to determine if they are taxable.

Since not taxable, no need to enter.

[Yosal1958]

Unfortunately for people who are not aware of the tax code they will pay tax on the refunds because of a bug in the code.

[VictoriaD75]

As you indicated in your original post, you prompted the software that you took the standard deduction. If this is the case, the state tax refund is not taxable. State and local taxes are part of itemized deductions. If you itemize, you are deducting from Federal income these taxes. Therefore, if you receive a refund of these taxes, they must be included in taxable income. This is not the case if you take the standard deduction. You did not get the tax benefit of reducing your Federal taxes from state and local taxes, therefore, you do not need to include the refund in taxable income.