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The amount that appears on Line 1 of IRS Schedule 1 (Form 1040) is entered by the taxpayer from the information on a Form 1099-G or similar statement. There are situations where taxpayers must go to IRS Publication 525 Taxable and Nontaxable Income and manually calculate their taxable state refund.  While TaxAct does not support the automatic calculation for these types of situations, the program does provide instructions on the Q&A screen of the situations not supported and provides a workaround for entering the correct taxable amount.

To view the Q&A screen describing the situations where a taxpayer may need to manually calculate the taxable state income tax refund amount:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
  2. Click State Income Tax Refund in the Federal Quick Q&A Topics menu
  3. Click the info icon next to Manually calculate taxable state and local refund.

The text on this screen states:

There are situations when a taxpayer may need to manually calculate the taxable state income tax refund using IRS Publication 525. These include: the refund is for a tax year other than 2019, you made your last payment of 2019 state or local estimated tax in 2020, you could not deduct all your tax credits for 2019 or you could be claimed as a dependent by someone else in 2019. If you are required to use Publication 525 then you will need to manually calculate the taxable portion. Enter the correct taxable amount on the State Income Tax Refund Document and enter the tax year of the refund. This amount will then transfer directly to Form 1040.

To enter the manually calculated amount in the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal
  2. Click State Income Tax Refund in the Federal Quick Q&A Topics menu
  3. Click +Add Form 1099-G to create a new copy of the form and enter the information or click Review to review a form already created (If you have not previously entered any information, the program will automatically proceed with the interview questions.)
  4. Enter the calculated taxable amount(s), enter the applicable tax year in the field Tax year of income tax refund and select the appropriate state

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