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If you itemized your deductions in the previous year, all or some of your prior year state income tax refund may be considered taxable income on this year's Federal tax return (Schedule 1 (Form 1040), Line 1). If you claimed the standard deduction, the state refund is not taxable.

  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 and then click +Add Form 1099-G State Refund Document 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
  3. 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 is taxable on your return (if you imported the information from last year's return, click Yes to review the screens and ensure the calculation is completed correctly)
  4. 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 

If you had a balance due with your 2018 state income tax return or made a 2018 state or local estimated tax payment after December 31, 2018, this may be deductible on Schedule A, Line 5.

  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 Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand the category and then click Taxes paid
  3. Enter the amount one of the following fields: Prior year state and local estimates paid after 12/31/2018 or State balance due paid with 2018 state return in 2019

Prior year Federal tax refunds (and payments) are not taxable (or deductible) on the current year's Federal income tax return. However, please check with your state to determine if this information needs to be reported anywhere on your current year state tax return.


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