Why did the 2018 amount of federal tax I owe change over $300 when I entered the 2017 amount paid in state taxes?

[t12adam5]

Once TurboTax reviewed my federal taxes, it found an error and advised me to enter box 5 from my 2017 Schedule A.  This is the amount of state taxes paid, not the refund.  I entered the amount and it raised my taxes due by over $300.  Why would the amount of state taxes paid last year affect the amount of federal taxes due this year?  State tax refund I understand, not the amount paid.  Thanks.

[rjs]

The amount of state tax that you deducted on line 5 of your 2017 Schedule A affects how much of your state refund is taxable income on your 2018 federal tax return. Before you made the correction, if it looked like you did not deduct any state income tax at all on your 2017 Schedule A, none of your refund would have been taxable. When you corrected it to show that you did deduct state income tax, that made part or all of your refund taxable.

You can see the calculation of the taxable amount of your state income tax refund on the State and Local Income Tax Refund Worksheet. (It's pretty complicated.) Since you are using the CD/Download TurboTax software you can look at the worksheet in forms mode, or you can find it in a PDF of your tax return that includes all forms and worksheets.