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What to do with 1099-G: State Tax refund with US-China Tax Treaty?

Forum|Forum|3 years ago
March 20, 2023
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Hello, I was a non-resident alien and filed federal and state tax refund with US-China Tax Treaty for 2021.

This year I received a 1099-G stating "state income tax refund", but its amount is on box 1. I became a resident alien in 2022, and I decided to use standard deduction for my federal tax refund.

I searched turbo tax help and found that for amount in box 1, I should follow the following process:

Where do I report a 1099-G for unemployment or paid family leave? (intuit.com)

But as its title claims, this seems to be for unemployment/paid family leave, which is not my case.

So how shall I submit this form?

Shall I follow the following process, which is for state tax refund instead?

But it says it's for amount in box 2 though...

Where do I enter a 1099-G for a state or local tax refund? (intuit.com)

I am a bit confused and thank you for any suggestion!

Best answer by ErnieS0

Yes. Add your 2021 state tax refund to your 2022 return if you itemized deductions. If you itemized deductions in 2021, it means you deducted your entire state tax withheld. However, part of that deduction came back as a refund, so that portion should not be deducted, which is why it has to be added to your 2022 income.

See Taxable Refunds, Credits or Offsets of State or Local Income Taxes

LindaS5247

When you receive a refund, offset, or credit of state or local income tax, that amount generally appears in box 2 of the 1099-G form. However, you don't necessarily have to report this amount on your federal tax return or pay additional federal taxes.

You only need to report it as federal income if you took a federal deduction for paying those taxes in a prior year and that deduction actually reduced your federal taxes. Box 3 of the form will indicate the relevant tax year. Did you file a Federal Tax Return in 2021 and take the standard deduction? Does your Form 1099-G indicate a 2021 in your Box 3?

If so, you will not need to report this 1099-G. You should keep it for your records.

If this does not answer your question p[lease fell free to contact us again on on TurboTax Community.

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L

Louise_Author

Hi Linda,

Thank you very much for the reply!

For the 1099-G I received, I don't know why, but it only has one box, with number 1 at its upper left corner, saying "State Income Tax Refund". It doesn't have box 2 or 3 or other numbered boxes. There is a box without number saying "refund is for tax year 2021".

For my federal tax return for 2021, as I said before, I was non-resident alien in 2021. So I filed 1040-NR and used itemized deductions, because I wanted to use the China tax treaty, which reduced my tax.

"You only need to report it as federal income if you took a federal deduction for paying those taxes in a prior year and that deduction actually reduced your federal taxes. "

I also received state tax refund for 2020 and added it to my federal tax return in 2021. But that actually increased my taxable income and tax instead of reducing it. Does it mean that I don't need to add 1099-G for 2021 to my tax return in 2022?

I hope this information explains my situation a little better.

Thank you again!

E

ErnieS0Answer

Yes. Add your 2021 state tax refund to your 2022 return if you itemized deductions. If you itemized deductions in 2021, it means you deducted your entire state tax withheld. However, part of that deduction came back as a refund, so that portion should not be deducted, which is why it has to be added to your 2022 income.

See Taxable Refunds, Credits or Offsets of State or Local Income Taxes

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