1040 Schedule 1 and State Income Tax Refund

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  • #74167
    agawam27
    Participant

    Since I took the Standard Deduction on my 2020 1040 and plan to do the same for my 2021 1040, will I need to report my Tax Year 2020 Virginia Refund as taxable income on Line 1 of my 2021 1040 Schedule 1?

    Thank you!

    #74171
    Kaye Thomas
    Moderator

    No! Your state income tax refund is taxed on your federal return only to the extent you received a benefit from claiming state tax as an itemized deduction. You should receive Form 1099-G indicating the state has reported this refund to the IRS, but IRS will be aware that you didn’t itemize and therefore don’t have to report the refund as income.

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