Your prior year tax refund from a state or local government may be considered taxable income if you itemized deductions on your prior year Federal return. Conversely, if you claimed the standard deduction instead, your prior year state or local income tax refund will not be taxable on this year's Federal return.
Generally, the state or local taxing authority will issue a Form 1099-G if you received a tax refund. Please note, however, many states are no longer mailing these forms to taxpayers. Therefore, you may need to visit their website
to retrieve your form.
To enter Form 1099-G into the TaxACT program for your prior year state or local tax refund:
- From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
- Click State Income Tax Refund and then click Yes
- The program will proceed with the interview questions for you to enter or review the appropriate information (if prompted, click Add to create a new copy of the form and enter the information from your Form 1099-G, or click Review to review a form already created)
- Once all forms have been entered and you are back on the screen titled State Income Tax Refund - Document - Summary, click Continue and then click Yes if you want to determine what portion (if any) of the refund amount(s) entered are taxable on your return.
- If you did NOT itemize on your prior year federal tax return, click Did Not Itemize Last Year and none of your state income tax refund will be taxable on your federal return this year. The screen titled State Income Tax Refund - Taxable Refund will indicate that the taxable portion of your prior year state income tax refund is $0.
- If you DID itemize on your prior year federal income tax return, click Itemized Last Year and the program will proceed through the applicable screens for you to enter the information from your prior year federal return to determine the taxable amount (if any) of your state income tax refund. After you have entered the information, proceed to the screen titled State Income Tax Refund - Taxable Refund, where the taxable portion (if any) of your state income tax refund is listed.
Note that information regarding the prior year itemized deductions must be cleared if you wish to go back and answer No
to the question Did you claim itemized deductions on last year's federal tax return?
and have the amount calculate correctly.
Additionally, the State Refund Worksheet
calculates the amount (if any) of the state income tax refund received that would be taxable and transferred to Line 10 of IRS Form 1040.
To review the calculations and/or print the State Income Tax Refund worksheet: TaxACT Online Users:
- Sign in to your TaxACT Online return
- Click Forms on the right side of the screen
- Click View complete Forms list below Forms
- Expand the Federal folder and then expand the Worksheets folder
- Scroll down and select Form 1040 State Refund - State Refund Worksheet
- Click Print and then click Your Federal Form 1040 State Refund.pdf. The form will appear in a PDF read only format. At that time you can click the printer icon to actually print the form or close the window without printing.
NOTE: If, after you click Print in Step 6 above, you are brought to the screen titled Payment Option, you will need to process the payment for your product fees, and then repeat the steps above.
TaxACT Desktop Users:
- Click on the Forms in the top toolbar
- Expand the Federal folder
- Expand the Worksheets folder
- Scroll down and double-click Form 1040 State Refund - State Refund Worksheet