How to tell whether a 2023 return's state refund is taxable refund on 2024 return or not?

[workhard2022]

Case:  Taxpayer XYZ filed his 2023 individual tax return using itemized deductions. He received both a federal and state tax refund for the 2023 tax year. As I prepare his 2024 Form 1040, I need to determine whether his 2023 state tax refund is taxable.

Here are his 2023 Schedule A/TAXES YOU PAID section details: 

Line 5a state and local tax: $20,000

Line 5b real estate tax: $10,000

Line 5d: $30,000

Line 5e: $10,000

Question:     Based on the above details, it appears that Taxpayer XYZ applied the $10,000 limit not his $20,000 taxes, my understanding is that the 2023 state tax refund is non-taxable. Could you confirm if this interpretation is correct?

Thank you for your help!

[sjrcpa]

Correct.

Doesn't the software compute it with the worksheet?

[workhard2022]

Thanks. I don't a worksheet related to taxable refund in pro-connect.

[sjrcpa]

For situations where it is not so clear you can always fill out the one the IRS provides.

[George4Tacks · Accepted solution]

@workhard2022 look at https://accountants.intuit.com/support/en-us/help-article/form-1099-g/state-local-refunds-taxable-wo...