Any refund you received from a state or local government may be taxable on your Federal Return. The program will automatically calculate the taxable amount when you enter the amount listed in Box 2 of your 1099-G, your filing status and your itemized deduction amounts from your accepted tax return (Schedule A) last year.
If you did not itemize your deductions on last year’s tax return, the refund is not taxable.
If you filed an accepted return last year using the same account, the program will pull the information forward for you.
See our KB Article for more information on determining if your state and local refund is taxable.