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Federal input screens

Screen Refunds - State and Local Tax Refunds (1040)

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Overview

Use this screen to record state and local income tax refunds.
Source data entry
The UltraTax CS
Source Data Entry
 tool lets you enter data on facsimile versions of forms your clients submit for the preparation of their tax returns. Once the facsimile forms are completed, you can export the data and transfer it into your client data files via the data sharing feature.

Prior Year Information

The Tax Refund Worksheet calculates based on the data you enter in this section and if you do the following for all of your clients: select
Setup
,
1040 Individual
,
Other Return Options
, the
Other
 tab, and mark the
Print Tax Refund Worksheet if applicable
 checkbox.
State / local income tax refunds
Enter 100 percent of the taxpayer's and/or spouse's state/local tax refund amounts here. If the client was processed using the
2024
 application, state and local income tax refunds are automatically proforma'd if the following conditions existed in the
2024
 return: the taxpayer itemized deductions, state, or local taxes were deducted on Schedule A (rather than general sales tax), and the taxpayer received a state or local income tax refund (of income tax paid and not a refund because of a state credit). Therefore, the refund amount that proformas may not equal the amount on the Form 1099-G.
The refund is treated as fully taxable and the entire amount transfers to Schedule 1 (Form 1040), line 1, unless you select to have the Tax Refund Worksheet printed. To do this, select
Setup
,
1040 Individual
,
Other Return Options
, the
Other
 tab, and mark the
Print Tax Refund Worksheet if applicable
 checkbox.
For the worksheet to calculate correctly, follow these guidelines based on the filing status in the relevant year.
  • If filing status was married filing jointly, complete the
    Taxpayer
     column only.
  • If the taxpayer and spouse had different filing statuses, complete both
    Taxpayer
     and
    Spouse
     columns.
  • If the filing status was married filing jointly for both, but the individuals were married to different people, complete both
    Taxpayer
     and
    Spouse
     columns.
  • If the filing status was married filing separately, complete both
    Taxpayer
     and
    Spouse
     columns.
The information that follows describes some of the fields that appear in the attached statement.
  • Refund type codes:
     When code
    7
     or
    8
     is selected, the total amount from
    Refund Amount
     for that item will be added to any other amounts from the Tax Refund Worksheet and included in the total on Schedule 1 (Form 1040), line 1. If the Tax Refund Worksheet isn't used, all amounts coded
    7
     or
    8
     in
    Refund Amount
     will be included on Schedule 1 (Form 1040), line 1.
  • Amount Allocated to Tax Paid in Following Year:
     Amounts in this field reduce the refund amount included on the tax refund worksheet. This amount automatically proformas, and a statement prints detailing the calculation performed during proforma. However, this calculation statement won't print if proforma amounts and/or codes are overridden in the attached statement.
    note
    Amounts entered in
    Amount Allocated to Tax Paid in Following Year
     with Type code
    1
     or
    2
     will also reduce the amount of state and local income taxes reported on Schedule A.
  • State:
     If you're processing a state return, enter a state postal code for proper state processing. Select
    F4
     from this field to view a list of available state postal codes.
  • Trade or Business:
     Leave this column blank if the state or local income tax refund should be reported on the Tax Refund Worksheet or directly on Schedule 1 (Form 1040), line 1. This field will be marked automatically if Form 1099-G, Box 8 was marked in
    Source Data Entry
     that was imported to this statement. A diagnostic also displays indicating the refund may need to be reported on Schedule C or F, instead of on the Tax Refund Worksheet, when the income is related to a trade or business.
2024
 allowable standard deduction
Include additional deductions for blindness and the aged.
2024
 State/local taxes paid in excess of deduction (Sch A line 5d – 5e)
Enter the amount that the
2024
 Schedule A, line 5d, amount exceeded the Schedule A, line 5e, state and local taxes deduction limit. This amount is factored into the calculation for line 2a on the Tax Refund Worksheet (Wrk1).
2024
 taxable income
If the taxable income was actually negative (Form 1040, line 11 minus line 14, was less than zero), enter the negative amount.
2024
 st / loc refund with no tax benefit...
Enter the amount to be subtracted from the prior-year state or local tax refunds as a result of no tax benefit due to AMT, zero tax, or the Schedule A state and local taxes limitation.
This amount is entered automatically during the proforma process. For the AMT no benefit, a statement prints detailing the calculation performed during proforma. However, this calculation statement won't print if proforma amounts and/or codes are overridden in the
State/local income tax refunds
 statement or if the amount in this field is overridden. The calculation for the AMT, zero tax, or Schedule A taxes limitation can be viewed on the prior year Worksheet 11.
2024
 general sales tax deduction election
Enter
X
 to indicate that general sales tax was deducted on Schedule A, line 5, on the
2024
 return. When this field is marked, any
2024
 state/local refund amount entered in the
State/local income tax refunds
 statement is excluded from the calculation of taxable refunds.
2024
 state and local income tax paid
Enter the amount of state and local income tax paid from the
2024
 Schedule A, line 5. When state and local income taxes are deducted instead of the general sales taxes on Schedule A, and a state or local income tax refund is generated in
2024
, the amount in this field with the amount in
2024
deductible general sales tax
 is used to determine if a sales tax benefit exclusion applies.
If the difference between these 2 fields is equal to or greater than the refund, then the entire refund is taxable and no sales tax benefit reduction amount applies (that is, the Tax Refund Worksheet line 2b is blank). If the difference between these 2 fields is less than the refund, then the refund minus the difference is the amount that goes to line 2b as the sales tax benefit reduction. See the
Miscellaneous Income
,
Recoveries
,
Itemized Deduction Recoveries
,
State tax refund
 section in IRS Publication 525,
Taxable and Nontaxable Income
.
2024
 deductible general sales tax
Enter the amount of deductible sales tax reported on the
2024
 General Sales Tax Deduction Worksheet, line 26. When state and local income taxes are deducted instead of the general sales taxes on Schedule A, and a state or local income tax refund is generated in
2024
, the amount entered in this field with the amount entered in
2024
state and local income tax paid
 is used to determine if a sales tax benefit exclusion applies.
If the difference between these 2 fields is equal to or greater than the refund, then the entire refund is taxable and no sales tax benefit reduction amount applies (that is, the Tax Refund Worksheet line 2b is blank). If the difference between these 2 fields is less than the refund, then the refund minus the difference is the amount that goes to line 2b as the sales tax benefit reduction. See the
Miscellaneous Income
,
Recoveries
,
Itemized Deduction Recoveries
,
State tax refund
 section in IRS Publication 525,
Taxable and Nontaxable Income
.
2023
 taxable income
If the taxable income was actually negative (Form 1040, line 14 minus line 11, was less than zero), enter the negative amount.
2023
 st / loc refund with no tax benefit...
Enter the preparer-calculated amount, to be subtracted from the state / local tax refunds entered in this screen, on which no tax benefit was derived due to AMT or zero tax.
2023
 general sales tax deduction election
Enter
X
 to indicate that general sales tax was deducted on Schedule A, line 5, on the
2023
 return. When this field is marked, any
2023
 state/local refund amount entered in the
State/local income tax refunds
 statement is excluded from the calculation of taxable refunds.
2023
 state and local income tax paid
Enter the amount of state and local income tax paid from the
2023
 Schedule A, line 5. When state and local income taxes are deducted instead of the general sales taxes on Schedule A, and a state or local income tax refund is generated in
2023
, the amount in this field with the amount in
2023
deductible general sales tax
 is used to determine if a sales tax benefit exclusion applies.
If the difference between these 2 fields is equal to or greater than the refund, then the entire refund is taxable and no sales tax benefit reduction amount applies (that is, the Tax Refund Worksheet line 2b is blank). If the difference between these 2 fields is less than the refund, then the refund minus the difference is the amount that goes to line 2b as the sales tax benefit reduction. See the
Miscellaneous Income
,
Recoveries
,
Itemized Deduction Recoveries
,
State tax refund
 section in IRS Publication 525,
Taxable and Nontaxable Income
.
2023
 deductible general sales tax
Enter the amount of deductible sales tax reported on the
2023
 General Sales Tax Deduction Worksheet, line 26. When state and local income taxes are deducted instead of the general sales taxes on Schedule A, and a state or local income tax refund is generated in
2023
, the amount in this field with the amount in
2023
state and local income tax paid
 is used to determine if a sales tax benefit exclusion applies.
If the difference between these 2 fields is equal to or greater than the refund, then the entire refund is taxable and no sales tax benefit reduction amount applies (that is, the Tax Refund Worksheet line 2b is blank). If the difference between these 2 fields is less than the refund, then the refund minus the difference is the amount that goes to line 2b as the sales tax benefit reduction. See the
Miscellaneous Income
,
Recoveries
,
Itemized Deduction Recoveries
,
State tax refund
 section in IRS Publication 525,
Taxable and Nontaxable Income
.
2022
 taxable income
If the taxable income was actually negative (Form 1040, line 11a minus line 8b, was less than zero), enter the negative amount.
2022
 st / loc refund with no tax benefit...
Enter the preparer-calculated amount, to be subtracted from the state / local tax refunds entered on this screen, on which no tax benefit was derived due to AMT or zero tax.
2022
 Deductible general sales tax
Enter the amount of deductible sales tax reported on the
2022
 General Sales Tax Deduction Worksheet, line 26. When state and local income taxes are deducted instead of the general sales taxes on Schedule A, and a state or local income tax refund is generated in
2022
, the amount in this field with the amount in
2022
state and local income tax paid
 is used to determine if a sales tax benefit exclusion applies.
If the difference between these 2 fields is equal to or greater than the refund, then the entire refund is taxable and no sales tax benefit reduction amount applies (that is, the Tax Refund Worksheet line 2b is blank). If the difference between these 2 fields is less than the refund, then the refund minus the difference is the amount that goes to line 2b as the sales tax benefit reduction. See the
Miscellaneous Income
,
Recoveries
,
Itemized Deduction Recoveries
,
State tax refund
 section in IRS Publication 525,
Taxable and Nontaxable Income
.

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