Question

I received a Middle Class Tax Refund from the state of california. Is this considered taxable income? I received a 1099-Misc form

Forum|Forum|3 years ago
January 18, 2023
3 replies
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TurboTax Online

B

Bsch4477

Yes, it is income for federal but not for California.

A

Ace in Space

My understanding is since this a tax refund, it is not taxable on the federal return if you use the standard deduction on the federal return. If you itemize deductions and deduct state income tax, then some part of it is taxable since you received some tax benefit from the deduction . It should have been reported on a 1099-G. 2022 Turbo Tax should be modified to handle this.

B

Bsch4477

See @SharonD007 post.

SharonD007

No, the Middle Class Tax Refund from California is not taxable to CA, and you do not need to claim it as income on your California tax return. Please see the link from the Franchise Tax Board Help With The Middle Class Tax Refund.

However, the Middle Class Tax Refund may be taxable on your federal tax return which is why CA will be mailing 1099-MISC for MCTR payments of $600 or more. The IRS has not provided a clear answer on this issue but IRS Pub502 states “an amount included in your income is taxable unless it is specifically exempted by law” which this type of payment is not. Income that is taxable must be reported on your return and is subject to tax. See the link for more information IRS Pub 525 Taxable and Non-Taxable Income.

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Z

ZhuoliA

Middle Class tax refund from the state of California is not considered taxable income for California state income tax purposes. For federal purposes, the IRS hasn't issued specific guidance for the treatment of these payments, and they may be taxable.

Please see this post for more information.

@rrfisher916

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Ace in Space

Unfortunately post is no help for Turbo Tax desktop users as we have no access to the software listed.

VolvoGirl

I entered it on my Desktop Home & Business

Enter the CA Middle Class Tax Rebate on a 1099Misc and put the amount in box 3. It will show up as Other Income on Schedule 1 line 8z which flows to 1040 line 8.

Go to Federal (Personal for HB) > Wages & Income, might need to continue though the general screens.
When you come to the Wages - Your Income screen click on Add Income or
scroll down to Other Common Income, then 1099Misc.
Put the amount in box 3 and follow the prompts.
On the page with a long list of reasons pick None of these apply -Continue.
Say No it did not involve work -Continue
You got it in 2022 -Continue

On California section you will see HERE’s INCOME THAT CALIFORNIA HANDLES DIFFERENTLY. Scroll down to Miscellaneous and scroll down to MIDDLE CLASS TAX REFUND and follow the prompts to exclude the income from CA.