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received two 1099-G CA income tax refund for in 2023. now married in 2023. is turbo tax calculating this correctly?

got married in 2023. was not married in 2022. my partner and i received our separate 2023 1099-Gs for California state income tax refunds (for tax year 2022). 

we are filing jointly for the first time for 2023. I entered the combined totals for both 1099-Gs ($2000) into turbo tax other common income section. turbo tax checked if the 2022 refunds are taxable. i selected itemized deductions, it asked to confirmed if my 2022 federal return info is correct, but it only shows my single filing status for 2022 ($4000 paid to state and local taxes). clicking yes says the 2022 refund is taxable. 


is turbo tax correct in this situation? sounds like its basing its decision on my personal, single filing instead of both mine and my partners.

 

what scenario would make the 2022 refund not taxable?

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1 Reply
rjs
Level 15
Level 15

received two 1099-G CA income tax refund for in 2023. now married in 2023. is turbo tax calculating this correctly?

The calculation of the taxable amount of the state income tax refund has to be done separately for each of you.


You said you "selected itemized deductions" when you answered the questions in TurboTax for 2023. Did you actually claim itemized deductions on your 2022 federal tax return? If so, did you claim an itemized deduction for state income tax on Schedule A line 5a, with the box on that line not checked?


Did your "partner" (now your spouse) also claim an itemized deduction for state income tax on his or her 2022 tax return? If not, your spouse's refund is not taxable. In that case, do not enter anything about your spouse's refund. Just enter your own refund, not the combined total, and the information from your own 2022 tax return. TurboTax will then do the calculation correctly.


If you both claimed itemized deductions for state income tax on your 2022 federal tax returns, the taxable amount of each refund has to be calculated separately. TurboTax will not do that for you. You would have to do the calculations yourself outside of TurboTax, and enter in TurboTax the total of the two taxable amounts that you calculate. You could use the State and Local Income Tax Refund Worksheet on page 86 of the 2023 IRS Instructions for Form 1040. You would have to use a separate worksheet for each person, then add the two taxable amounts together.


What would make one of the 2022 state refunds not taxable is if you did not get any tax benefit on your 2022 federal tax return from deducting the amount that was later refunded. If you did not claim itemized deductions (you used the standard deduction) or you did not deduct state income tax, then you certainly did not get any tax benefit from deducting the state income tax. If you did claim an itemized deduction for state income tax, it's still possible that you did not get any tax benefit from the deduction, or only a partial benefit. Determining the amount of the tax benefit, if any, is a little complicated. That's what you need the worksheet for, if you have to do the calculation for both of you.

 

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