Where do you file the middle class tax refund?

[Bunny-13]

Hooray!! State and Federal returns were accepted after following all the tips to delete the MCTR entry and then coming back and entering the info again! Happy Sunday! 😎

[CarissaM]

There is an update schedule for Jan 30, 2023, that will fix this issue. Please check back on Jan 30. 

[jessciaz7]

How did you delete from CA return? 

[DianeW777]

In most cases, if you did not deduct the tax on the federal return in the past, you do not need to include this income.  Also, the IRS has not issued any guidance to the contrary.  I suggest you remove the Form 1099-MISC from your return, keep it in your file for future use, should you need it. 

Then file your return and it will not be taxable on either return and your return will not reject.

• Tax benefit rule.  IRS Publication 525  You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.

@jessicaz7

[ziporder]

Does this mean that if I did not see this information here and take action that TurboTax would NOT have found the issue for me? Very few people would actually run across by accident. Thanks for the heads up!

[Bsch4477]

The IRS will clarify this issue this week. Hold off filing until then. 

[JamesG1]

The IRS statement is here.

[VolvoGirl]

UPDATE

Feb 10, 2023 IRS has ruled the California Middle Class Tax Refund is NOT taxable
https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

[Freestuff]

IRS released on 02/10/23 that the California Middle Class Tax Refund IS NOT TAXABLE ON FEDERAL.  I received a 1099-MISC.  Do I still need to enter it?  Where do I enter it?  How do I make sure TurboTax calculates correctly and doesn't count it as taxable income? 

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

[VolvoGirl]

No you do not need to enter it at all.  

[KeithS900]

No forms were provided with the credit card, not able to enter without a Form name/option

[VolvoGirl]

@KeithS900   What?  They don't send the 1099Misc for under 600.   But it doesn't matter.  You do not need to enter the CA Middle Class Tax Refund at all.  It is not taxable on federal or state.

[ErnieS0]

You do not have to include the California Middle Class Tax Refund on your federal or state taxes, as Tax Champ VolvoGirl said.

The IRS on Feb. 10 issued guidance stating that the MCTC was one of the payments issued by 17 states that do not have to be included on your taxes.

“[P]eople in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island. Alaska is in this group as well, but please see below for more nuanced information.”

See: “IRS issues guidance on state tax payments to help taxpayers.”

@KeithS900 

[VolvoGirl]

UPDATE......

You do not need to enter or report the 1099Misc for the CA Middle Class Tax Refund

2/10/2023 IRS determined the CA Middle Class Tax refund is not taxable  IRS issues guidance on state tax payments to help taxpayers | Internal Revenue Service

[goodsoil100]

THANK YOU!!!!