State Refund (1099-G) Not on The 1040

State Refund

A refund of state income tax may or may not be taxable. If in the year the tax was paid the taxpayer did not itemize deductions, or elected to deduct state and local general sales tax instead of state and local income taxes, then the state refund is not taxable and nothing should be on Form 1040 line 10. If the taxpayer did itemize deductions, it may be taxable to the extent it provided a deduction to the taxpayer. To calculate the taxable amount, the Taxable State/Local Refunds worksheet should be completed.

 

Entering a state refund from Form 1099-G:

1. Click Add Form and then click FRM 1099-G to add Form 1099-G to the tax return.

2. Enter the information on Form 1099-G, including the State/Local Income Tax refunds, credits or offsets in Box 2.

3. Complete the Taxable State/Local Refunds Worksheet.

NOTE: If the prior year return was done in the program, the information will carry forward to complete the worksheet.

4. Double click the RET 1040 form on the "Attached Forms" list.

5. Click the box for Line 10, then click the Worksheets Button. 

6. Complete the Taxable State/Local Refunds Worksheet.