State Tax Return Refund & Federal Return

Hi, if I filed a 2021 state tax return in the State of Delaware in Feb. 2022 for my daughter and she received a modest refund. Was I supposed to include the state tax refund as income on her 2022 Federal Return? Her 2022 taxable income was $0.00 after the standard deduction and exemptions. Thanks

posted

Connect with an expert

2 Best answer

Accepted Solutions

State Tax Return Refund & Federal Return

A state tax refund from filing the prior year's taxes would only be taxable if there was a tax benefit - i.e., you took an itemized deduction for taxes paid. Since your daughter's return for 2021 took the standard deduction, then she didn't deduct the taxes on her 2021 return and the refund isn't taxable for 2021.

Enter a 2021 refund in the 2022 TurboTax program and TurboTax will confirm whether it's taxable.

See this help article for more information.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

State Tax Return Refund & Federal Return

You should keep the records in case there is a question but if it did not change her tax liability, then there would not be any penalty or interest associated with the state refund. So it would not be necessary to amend the return for that item. If something else arises that would require an amendment, you can certainly add it to the return then.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

6 Replies

State Tax Return Refund & Federal Return

A state tax refund from filing the prior year's taxes would only be taxable if there was a tax benefit - i.e., you took an itemized deduction for taxes paid. Since your daughter's return for 2021 took the standard deduction, then she didn't deduct the taxes on her 2021 return and the refund isn't taxable for 2021.

Enter a 2021 refund in the 2022 TurboTax program and TurboTax will confirm whether it's taxable.

See this help article for more information.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

State Tax Return Refund & Federal Return

Hi, the message stated that it was not taxable.

State Tax Return Refund & Federal Return

Thanks for the follow-up post. You did the right thing by entering the refund in TurboTax.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

State Tax Return Refund & Federal Return

Actually I had already filed the Federal return. Do I need to submit a corrected return even though there are no tax consequences?

State Tax Return Refund & Federal Return

You should keep the records in case there is a question but if it did not change her tax liability, then there would not be any penalty or interest associated with the state refund. So it would not be necessary to amend the return for that item. If something else arises that would require an amendment, you can certainly add it to the return then.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

State Tax Return Refund & Federal Return

Awesome. Thanks

Still have questions?

Questions are answered within a few hours on average.

Post a Question

*Must create login to post