The amount that appears on Line 1 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income is entered by the taxpayer from the information on a Form 1099-G Certain Government Payments 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 situations not supported and provides a workaround for entering the correct taxable amount.

Manually Calculate Taxable State or Local Refund

There are situations when a taxpayer may need to manually calculate the taxable state or local income tax refund using IRS Publication 525. These include: the refund is for a tax year other than 2021, you made your last payment of 2021 state or local estimated tax in 2022, you could not deduct all your tax credits for 2021 or you could be claimed as a dependent by someone else in 2021. 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 or Local Income Tax Refund Document and enter the applicable year as the tax year of the refund. For these situations, click "Review" to enter your Form 1099-G and enter the manually calculated taxable portion of your refund. This amount will then transfer directly to Form 1040.

To enter the manually calculated amount in the TaxAct program, go to our Form 1099-G - Entering State Income Tax Refund in Program FAQ.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.