1099-G = taxed refund??

[MoonLiteNite]

So in 2014-2015 i worked some time in another state. I had some extra taxes withheld from my paychecks. My company paid for a tax firm to do my taxes, hurrray! And all was good. i got a small little 200$ refund from said crappy state and i have been working all happy doppy back in my home state without income taxes. HURRRAYY!!
Now comes 2016 tax season and i have this 1099-G in the mail!!! The best i can come up with, is the state is trying to tax me and my state tax refund from LAST year. So i am being taxed on my refund check from them. Basically treating a tax refund as income. Or am i missing something?
Turbo tax doesn't seem to have a good spot for this, it thinks it is unemployment, or some type of farming thing.

I think i am just going to throw it away, i never plan to step back into that state in my life :/

[CareCPA]

A state refund is taxable for federal if you itemized on your prior year return.
If you did not itemize, a state refund is not taxable.

[MoonLiteNite]

I didn't do my state taxes, the company did.
I did my federal taxes in those years.

[CareCPA]

Did you itemize on your federal or take the standard deduction? If you took the standard, the state refund is not taxable. If you itemized and state taxes were a part of that itemization, then the refund is taxable.
It should not be taxable for state either way, but you may want to verify with someone in the same state as you.

[wudged]

So i am being taxed on my refund check from them. Basically treating a tax refund as income. Or am i missing something?

Yes, a tax refund check is income.  Your company withheld too much taxes for you - meaning you should have received that money as income throughout the year.  As a result, the state gave the extra tax they collected back to you.  This amount was excluded from your federal taxes, as your W-2 would have indicated you paid that amount in tax and did not receive it as income, so now you owe federal tax on it.

I didn't do my state taxes, the company did.
I did my federal taxes in those years.

It doesn't matter who actually filed the taxes - the taxes are based on your income.

[MoonLiteNite]

Yes, a tax refund check is income.  Your company withheld too much taxes for you - meaning you should have received that money as income throughout the year.

OHHHHHhhhh..
It is like a brain teaser there... i don't know why i didn't think of that.

Did you itemize on your federal or take the standard deduction? If you took the standard, the state refund is not taxable.

Standard, so i guess i am good. That is what i was getting from other sites and more researching as well.

[CareCPA]

Yes, a tax refund check is income.  Your company withheld too much taxes for you - meaning you should have received that money as income throughout the year.  As a result, the state gave the extra tax they collected back to you.  This amount was excluded from your federal taxes, as your W-2 would have indicated you paid that amount in tax and did not receive it as income, so now you owe federal tax on it.

No.

Your state withholding has absolutely no interaction with the federal wages reported to you on your W-2. If you made $50k, and for some reason your payroll got jacked up and your company sent all $50k to the state for withholding, your federal wages would still show $50k of taxable income. Your federal wages as reported on your W-2 is not an indication of the cash you received, but the compensation you earned, which are two different things.

Again, the only way a state refund is taxable is if you itemized in the prior year on Schedule A and your state taxes were a part of your itemized deductions. This is income in the following year because you used this amount to lower your AGI through your itemized deductions (different than withholding by itself). If you did not itemize on your federal return, your refund from the state is not taxable for federal income tax purposes no matter how large or small it is.

[wudged]

Ah, right.  Thanks for clearing that up.  I was thinking AGI but for some reason said it was reported on the W2 that way.