Where do you file the middle class tax refund?

[MapleK]

@AT168 If you are not receiving the 1099-MISC because you received less than $600, then there is no need for you to enter the income on the federal page. It is not taxable.

[AT168]

@MapleK Thank you for your response.  However I read online that "taxpayers must report any income even if they did not receive their 1099 form, unless it is a gift"  I believe the $600 limit is just the IRS requirement for Form 1099-MISC to be considered necessary to file by the payer.

I just saw a previous post regarding this matter...

To enter your other income as other miscellaneous income:

1. Click on the “Federal Taxes” tab ("Personal" tab in TurboTax Home & Business)
2. Next click on “Wages and Income”
3. Scroll down the screen until to come to the section “Less Common Income”
4. Choose "show more", then Miscellaneous Income
5. Choose "Other Reportable Income" and enter this information here under other taxable income 
6. Input CA Middle Class Tax Refund and amount

[MapleK]

@AT168 I can’t find any IRS guidelines on this refund. If you are going to enter the amount, then the TIN is 68-0204061 and use State of California as the payer.

[AT168]

@MapleK Thank you!!!!

[Bsch4477]

You are correct that all income must be reported. In TurboTax under Income go to Less Common Income and scroll down to Miscellaneous income. Scroll down to Other Reportable Income. Then you can report your rebate without a payer number and enter text—CA Middle Class Rebate. 

[DefinitelyNotAdam]

I've followed these steps to the T, and my return is still getting rejected because of this 1099-MISC for the MCTR.  Any ideas to why this might be?

[Bsch4477]

What does the reject say?

[Mommyof4girlz]

Description of error:

There is a potential issue with Form 1099-Miscellaneous if you received this form for payment of the California Middle Class Tax Refund.

What needs to be done:

We've identified an issue in your federal tax return. This issue is being resolved in a product release scheduled for January 27th, 2023. On or after January 27, 2023. you'll need to sign into TurboTax, complete a quick review (steps below), and resubmit your return. This is just for your federal 1040 tax return. To review and re-submit your return: If you're using TurboTax online: 1.Log into TurboTax.com 2.Select Check my return 3.Select on the left navigation menu Federal 4.Select Federal Review 5.Answer the question about the California Middle Class Tax Refund 6.File your return If you're using a CD or downloaded version of TurboTax: 1.Open TurboTax 2.Select open your return 3.Select on the top navigation menu Federal Taxes 4.Select Federal Review 5.Answer the question about the California Middle Class Tax Refund 6.File your return Note: The calculation change may affect the taxpayer's refund or balance due.

[Mommyof4girlz]

i got same rejection and posted what it says

[jcarr719]

My MCTR experience...

I entered the info from my CA 1099-MISC for the MCTR $700 (MFJ).  TT accepted it and all appeared good.  Flowed it through to the CA 540 Sch CA etc.  Checked all the forms and everything looked great.  I e-filed the Fed and, REJECTED.  "CA_MCTR_Payment - There is a potential issue with Form 1099-Miscellaneous if you received this form for payment of the California Middle Class Tax Refund."  

Called TT for phone support.  The agent looked and declared that everything was perfect.  Must've been a fluke, she said.  I believe her when she said she tried everything her book told her.  Maybe if you don't know, escalate to someone who might.  E-filed again and same reject. 

In the meanwhile, I filed CA on the FTB web site (TT forms weren't ready and I didn't want to pay the $20 fee).  Took 10 minutes to enter everything, plus FTB didn't hit me with an underpayment penalty.  All accepted and in the queue in Sacramento (or wherever).

Back to Federal.  After some add'l research, all I could find was that the MCTR MAY be subject to federal tax.  Nothing definitive one way or the other.  So I removed it from my federal TT.  e-filed again and it was accepted.  Plus I saved the tax on $700.  Only issue now is that the Fed return #s do not match CA.  If I remove the 540 CA adjustment (since there is nothing to adjust anymore), the end result is unchanged and all is correct.   

So maybe I'm one of the first to try this.  I don't have any W-2's so had all my data early. Or maybe there was something else that triggered the IRS reject.  

[Bsch4477]

Some users got an error message that TurboTax is updating the program to handle this which should happen January 27. 

[Bunny-13]

I was going to enter my information on the 1099-MISC but there isn't an option for a joint return. I could only enter myself or my husband.  Both was not a choice so how should I enter this, or does it matter.  Thank you!

[jcarr719]

In my case, I entered it for the SSN on the 1099-MISC (Husb in my case).

[Bunny-13]

Thank you! This makes sense and it is my husband's SSN too!  

[LosRubios]

I'm using the download version of TurboTax 2023 Deluxe (so it handles 1099-MISCs as part of the purchase price).

We file as MFJ and got the 1099-MISC from the Franchise Tax Board.

After waiting until TurboTax had updated a CA Form, I ran the Federal and State reviews and e-filed the Federal return today - 1/26 after it was rejected a couple of days ago.

As before, it was rejected due to the CA MCTR but the Customer Service message that accompanies the rejection says 'None'. The email message I received states "CA_MCTR_Payment - There is a potential issue with Form 1099-Miscellaneous if you received this form for payment of the California Middle Class Tax Refund."

If I click on the 'Learn More' button in the email, I just end up on a generic 'How do I fix a Rejected Return' page.

If I search TurboTax.com for CA_MCTR_Payment, I get a 'No results Found' message.

When you enter the 1099-MISC info for the CA MCTR and then scroll through the Continue buttons, you get to the screen that is titled 'Does one of these uncommon situations apply?'

You then check the 'This was a California Middle Class Tax Refund (MCTR)'

TurboTax then prompts a message at the bottom, above the 'Continue' button that reads 'The California Middle Class Tax Refund (MCTR) will not be taxable on your California or Federal returns.'

The problem is that even when you have followed these prompts, the MCTR amount (in our case $700) still appears in Line 8 on Page 2 of the Federal Form 1040 (which comes from Schedule 1 line 8z) and is then included in the Total Income on Line 9 and flows down into the AGI.

On the Deductions on the Federal Form 1040, Line 14, there is no -$700 entry that would remove the MCTR payment from income (ours just has the standard MFJ $27,300 deduction).

So right now, as of January 26th, while the UI for TurboTax states that the MCTR is not taxable, it does appear that it is included in the Total Income on the Federal 1040 Return and Schedules.

This is possibly why the Federal Return is being rejected.

I haven't tried filing the CA return as I want to make sure that the Federal Return is accepted before I send anything to the State due to the potential impact on the Federal Adjusted Gross Income of the current CA MCTR issue. That being said, the CA Form 540 created by TurboTax has automatically removed the $700 CA MCTR payment from the Adjusted Gross Income number that it has carried over from the Federal Form 1040.