Well, it's interesting that TurboTax has decided on their own that the MCTR is not subject to federal tax when the IRS has stated as recently as yesterday (2/3/2023) that they have issued no guidance on the matter. Any position taken by TurboTax is not, as they say in the tax business, "substantial authority". The IRS said on Friday 2/3/2023 that guidance clarifying whether California’s Middle Class Tax Refund payments should be considered income for federal tax purposes could come next week. I think the appropriate advice would be to wait for that guidance before filing your return.
