CA State Tax Refund Taxable/Nontaxable

[n1njah]

Hello, question about state tax refunds

Client received a refund and they itemized deductions last year. I'm trying to figure out if the refund is taxable, so I entered all items from Schedule A for 2021 in the State Refund Worksheet 'Amounts from 2021 Return'. The refund does not exceed the diff. between standard and itemized, does not exceed the the diff. between SALT cap & SALT paid. Sales tax was not deducted and for 'allowable general sales tax' in the worksheet I put the same amount as line 5a. Is there anything else to consider? Their AMT was zero and they had a nonrefundable CTC but I didn't enter this anywhere as of yet. The software is showing fully nontaxable but I'm still not sure.

Thank you~

[George4Tacks · Accepted solution]

Pub 525 has a worksheet. Use it. 

https://www.irs.gov/pub/irs-pdf/p525.pdf page 28

It is often easier to do it yourself and not totally trust the software. 

[n1njah]

Thank you very much