PTET--Tax Refunds

[JR500]

Hi--I am an individual and in 2024 received refunds for VA, NJ and NY for which I received a PTET (pass through entity tax) credit in those states and got the federal PTET deduction.    So, these refunds should be taxable.   I also received a CA tax refund (my home state) which should not be taxable as I did not get a deduction for the refund amount due to SALT limitations.   

I'm having difficulty in getting the right answer in TurboTax.   When TurboTax calculates the amounts that are taxable it says nothing is taxable (which is not correct).    I can override the TurboTax calculation so that all state refunds are taxable, but that's not correct either.   Is there a way to enter the information or override the info generated by TurboTax so that the refunds in 3 states (VA, NJ and NY) will be taxable but the refund in CA will not be?  (I am using TurboTax Desktop premiere).

Thank you!

[DianeW777]

It depends. If I understand your question, you are asking where to report the refund of the pass through entity tax (PTET) that was previously used as a deduction on your federal tax return. If so, you will enter it as instructed below. If the CA refund was not part of your deductions for 2023, do not include that refund.

TurboTax Online/Mobile:

1. Select Tax Tools > Tools (may have to scroll down) 

2. Select Topic Search at the top > Type search term > Go

TurboTax Desktop:

1. Search (upper right) > type state tax refunds > Click the Jump to... link

A pass-through entity tax (PTET) is a workaround to the state and local tax (SALT) deduction limit, enabling eligible pass-through entities to be taxed at the entity level for state income tax purposes.

[JR500]

Thank you.   So, even if I got a 1099-G for the 2023 California tax refund I would not list it as one of the refunds received in the state tax refunds (I thought I had to list all received so they wll agree with the records the states provided the IRS, but are you recommending not listing it as a workaround (as I could then check the box in 
TurboTax to make all the state tax refunds taxable).

Again, thanks. I apprecaite your help.