Don't assume your state income tax refund is taxable

Just because you've received a Form 1099-G from your state reporting the prior year's refund of state income tax to the IRS doesn't make it taxable. You only report the refund if and to the extent you had a tax benefit from deducting it. If you didn't itemize that year, you didn't get a tax benefit and none of the refund is taxable now.