Why does TurboTax include prior State tax refunds as income in 2020 when standard deductions were taken in previous years?

No. You should enter your previous refund(s) in TurboTax even if your refund is not taxable. If you used TurboTax last year, it will automatically include the amount.

Check your entries if you are showing a taxable refund but used the standard deduction. Your refund should not be taxable, and TurboTax will confirm that.

• Click on Federal in the left column
• Click Wages & Income at the top
• Go to Other Common Income. Click Show more
• Start/Revisit Refunds Received for State/Local Tax Returns
• Say Yes to Did You Get a State or Local Tax Refund in 2020?
• Fill in your information. Click Done on State and Local Tax Refund Summary
• Select I took the standard deduction in 2019 on the screen Let's See if Your 2019 Texas Refund Is Taxable
• You will see Good News! Your 2019 Texas Refund Is Not Taxable