Why do I need to pay tax on my last years NY State refund? Isn't a refund the extra money NY withheld and hence money that's mine?

You pay federal tax on your prior state refund only if you itemized your deductions.

If you itemized, you have already claimed the deduction for state/local tax paid, so this prevents you from receiving double credit.

For more information, follow this link: https://blog.turbotax.intuit.com/tax-tips/is-my-state-tax-refund-taxable-and-why-90/

Thanks Carolyn - I am actually talking about the NY State Return and not Federal. On the page "New York Income Allocation" in Turbo - do I need to enter my 2017 NY State Refund amount in the NY Source Portion in the row Taxable Refunds of State Income Tax??

No