Your tax refund from a state or local government for the prior year may be considered taxable income if you itemized deductions on your prior year federal return.

The opposite is also true: If you claimed the standard deduction instead, your prior year state or local income tax refund is not taxable on this year’s federal return.

Generally, the state or local taxing authority will issue a Form 1099-G Certain Government Payments if you received a tax refund. However, many states are no longer mailing these forms to taxpayers.

To enter Form 1099-G in TaxAct:

1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
2. Click State Income Tax Refund in the Federal Quick Q&A Topics menu.
3. Click + Add Form 1099-G State Refund Document to create a new copy of the form or click Edit to review a form already created.
4. Continue with the interview process to enter all of the appropriate information.
5. On the screen titled Enter the state or local income tax refund information, enter or review the information from your prior year federal return to determine the taxable amount of your state income tax refund, select "2019" or older for the Tax year of income tax refund, then click Continue.

Understanding the State Refund Worksheet:

The State Refund Worksheet reflects the calculation of the amount (if any) of the state income tax refund received that would be taxable and transferred to Line 1 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income.

To review the calculations and/or print the State Income Tax Refund worksheet:

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