My wife and I, married filing jointly, will have to amend our 2011 and 2012 California tax returns. This will ultimately result in about a $600 refund from CA. Will we have to restate our 2011 and 2012 federal tax returns? In particular, must we have amend line 5 of 1040 Schedule A (state income tax deduction) or the "taxable refunds, credits,..." entry on line 10 of 1040? Or should we declare the refund in the tax year we receive it, i.e., 2014 or even 2015?

Background: We still have about $150K in capital loss carryover from when the dotcom bubble burst. We had been diligently taking our $3000 capital loss deduction and carrying the balance forward. However, In the 2011 tax year, TurboTax mistakenly entered a 0 on the carryover line and neglected to take the deduction on our California return. Same thing in 2012. Federal has been correct throughout. We have not filed for 2013 (we're still within the extension period).

And if you have any pointers to documentation or similar cases, I'd very much appreciate it. It would go a long way to boosting my confidence that we have the right answer.

Thank you so much!

Does amending state require amending federal?
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My wife and I, married filing jointly, will have to amend our 2011 and 2012 California tax returns. This will ultimately result in about a $600 refund from CA. Will we have to restate our 2011 and 2012 federal tax returns? In particular, must we have amend line 5 of 1040 Schedule A (state income tax deduction) or the "taxable refunds, credits,..." entry on line 10 of 1040? Or should we declare the refund in the tax year we receive it, i.e., 2014 or even 2015?=====>>>>> it depends.Your tax refund from CA may be taxable. If you claimed the standard deduction on your federal tax return last year, your state tax refund is not taxable and no need to amend your fed returns. So,unless you take general sales taxes paid to CA on Sch A of 1040 or take std deduction instead of itemized deductions, you need to file amended fed returns aslongas you claim state and local taxes paid as your state taxes paid were changed.You also need to amend line 5 of 1040 since the amounts on the line were changed.If you are amending more than one tax return, prepare a 1040X for each return and mail them in separate envelopes to the appropriate IRS campus.. Your state tax liability may be affected by a change made on your federal return

Note; None of your CA refund is taxable if, in the year you paid the tax, you either did not itemize
deductions, or elected to deduct state and local general sales taxes instead of as mentioned above.
state and local income taxes.

Background: We still have about $150K in capital loss carryover from when the dotcom bubble burst. We had been diligently taking our $3000 capital loss deduction and carrying the balance forward. However, In the 2011 tax year, TurboTax mistakenly entered a 0 on the carryover line and neglected to take the deduction on our California return. Same thing in 2012. Federal has been correct throughout. We have not filed for 2013 (we're still within the extension period).
========>>>>>>>then you need to amend yoru 2011 return to properly reflect your MNOL c/o oon your 2011/2012 retunes.