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There is a special worksheet to calculate the taxable portion of the state income tax refund.
That worksheet is located in instructions.
Here are instructions for 2014
the worksheet is located on page 27.
You wrote - When my accountant filled in box 10, she reduced the amount of the refund that was taxable by $492. I can't figure out why or where that number came from.
The answer to this question is that the taxable portion of the state income tax refund is calculated on that worksheet.
If you need help to re-establish the worksheet - let me know.