1099-G State Tax Rebate Issued in 2025 for Tax Year 2024 - Do I need to enter into TurboTax?

[G-Man]

My state issued a $400 tax rebate in 2025 for tax year 2024. I received a 1099-G form in the mail the other day. The big question for me is "Do I need to enter this information into TurboTax?"

Here is the response from AI on this topic:

The 2025 tax rebate (up to $400 for joint filers, $200 for individuals) is generally not taxable on your state return, as it is considered a refund of tax paid. However, it may be taxable on your federal return if you itemized deductions in the previous year and received a tax benefit.

 

[levindb]

I would enter it and TurboTax will figure it out. If you took the standard deduction last year (2024) then it should have no impact.

 

[SecondCor521]

I agree with levindb and the AI answer (even though AI is sometimes wrong on tax topics), with one minor modification - if I knew I took the standard deduction the previous year, I simply wouldn't bother entering it in to the tax software because if you didn't itemize in the year for which you received the refund (2024 in this case), then it isn't taxable.

 

[G-Man]

I did itemize in 2024. So I will enter the information and see what questions TurboTax asks me.

 

[pb4uski]

It should be income in 2025 when all is said and done.

Let's say that your 2024 state income tax estimated payments or withholdings were $3,000 and you deducted $3,000 on your 2024 federal return but when you copleted your state return you were due a $400 refund and received the refund in 2025. Reflecting the $400 as refund as income in 2025 just offsets that in 2024 you got $400 more for itemized deductions than you deserved.

 

[G-Man]

It should be income in 2025 when all is said and done.

Let's say that your 2024 state income tax estimated payments or withholdings were $3,000 and you deducted $3,000 on your 2024 federal return but when you copleted your state return you were due a $400 refund and received the refund in 2025. Reflecting the $400 as refund as income in 2025 just offsets that in 2024 you got $400 more for itemized deductions than you deserved.

So federal and state taxes will be due on the $400? I will see what TurboTax asks me.

 

[cathy63]

So federal and state taxes will be due on the $400? I will see what TurboTax asks me.

Maybe it's taxable, maybe not. Nobody can answer that without seeing your whole 2024 return.

The question that needs to be answered is "did you benefit from deducting the $400 on your Federal return in 2024?" For example, if you paid $15K of state and local taxes in 2024, then the $400 refund is not taxable because the max SALT you could have deducted that year was $10K so you didn't actually get to deduct that $400. Likewise if you checked the box on Schedule A that says you deducted sales tax instead of state income tax, then you didn't deduct the $400. In either of those cases you've already paid the tax on the amount that was refunded and won't be taxed again There's a worksheet in the 1040 instructions that TTax will fill out behind the scenes to figure this out.

Also, if you used TTax to do your 2024 return and you import that to the 2025 program, then it should already know how much you got for your state refund and it will just ask you to confirm that you did receive that amount. As long as you didn't amend your returns using some other method and the State and Feds didn't adjust them and send you a letter, then TTax has all the numbers it needs. If you used some other software in 2024 or if anything on the returns was changed after you filed them, then you'll need your 2024 returns to calculate the amount of the refund that's taxable.

 

[pb4uski]

So federal and state taxes will be due on the $400? I will see what TurboTax asks me.

Just federal I would think.

 

[jollystomper]

Just enter it. I use H&R Block and it took care of it. In my situation, in years I did not itemize it was not taxed at the federal level. In the years I did itemize, it was taxed at the federal level, since state and local taxes were part of my itemization. There were no taxes at the state level, logically it would not make sense ("you paid too much in taxes, here is your refund... now we will tax the refund again" ??).

 

[G-Man]

Maybe it's taxable, maybe not. Nobody can answer that without seeing your whole 2024 return.

The question that needs to be answered is "did you benefit from deducting the $400 on your Federal return in 2024?" For example, if you paid $15K of state and local taxes in 2024, then the $400 refund is not taxable because the max SALT you could have deducted that year was $10K so you didn't actually get to deduct that $400. Likewise if you checked the box on Schedule A that says you deducted sales tax instead of state income tax, then you didn't deduct the $400. In either of those cases you've already paid the tax on the amount that was refunded and won't be taxed again There's a worksheet in the 1040 instructions that TTax will fill out behind the scenes to figure this out.

Also, if you used TTax to do your 2024 return and you import that to the 2025 program, then it should already know how much you got for your state refund and it will just ask you to confirm that you did receive that amount. As long as you didn't amend your returns using some other method and the State and Feds didn't adjust them and send you a letter, then TTax has all the numbers it needs. If you used some other software in 2024 or if anything on the returns was changed after you filed them, then you'll need your 2024 returns to calculate the amount of the refund that's taxable.

cathy63. I did import my 2024 return in TTax in the 2025 program. When I started entering the 1099-G information into TTax, I was confused on what to enter for the question "Enter your total of all your payments and withholding." After some research, I found out that I needed to enter the "Total Payments/Credits" figure from my 2024 State Individual Income Tax Return". I proceeded through all the TTax questions and the State tax rebate amount was not taxable according to TTax.