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 would 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.
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 the Federal tab. On smaller devices, click the menu icon in the upper left-hand corner, then Federal
- Click State Income Tax Refund and then 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 or Local 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 imported the information from your last year's return, click Yes to review the screens and ensure the calculation is completed correctly)
- The program will proceed through the applicable screens for you to enter or review 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, you will reach a screen titled State or Local Income Tax Refund - Taxable Refund which will indicate the taxable portion (if any)of your prior year state income tax refund based on the entries on the previous screens
The State Refund Worksheet in the return reflects the calculation of 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:
- Sign in to your TaxAct Online return
- Click the My Return button in the top right corner
- Click Print Center, then click the Custom tab
- In the bottom section, scroll down and click the checkbox to the left of Federal Form 1040 State Refund
- Click the Print button and then click the PDF link. The item will appear in a PDF read-only format. At that time you can click the printer icon on the screen to actually print, or close the window without printing.
- Start your TaxAct Desktop program
- Click the Forms button in the top left corner
- Expand the Federal folder and then expand the Worksheets folder
- Click '+' next to Form 1040 State Refund - State Refund Worksheet
- Double click Federal Form 1040 State Refund
- Click the pink Printer icon in the toolbar above the form
In the print dialog box that appears you are able to choose if you wish to send the output to a printer or a PDF document. If you wish to only print preview the document, check the Print Preview box. Once the print preview window opens, click the Print button to actually print the document.