1. For most people, yes it is taxable on the federal, at this time. Yes it is a state credit, great job with the link. The problem lies in the last bullet at the bottom of the page on the Oklahoma Tax Commission website. It states:
HB3388 exempted the Parental Choice Tax Credit from Oklahoma income tax.
The Oklahoma Tax Commission cannot make a determination on whether a Parental Choice Tax Credit payment is taxable to a taxpayer for federal income tax purposes; that determination is based on each taxpayer’s individual facts and circumstances.
The only way for additional income to not be taxable is if your taxable income is below the taxing levels. This indicates that the income should be added to the federal for now. It may become exempt at a later date but it isn't specifically exempt. I do agree with @KrisD15 that this doesn't make sense as taxable on the federal and would expect it to become exempt and require an amended return. Nothing clearly states taxable or not and we have seen this with other states sometimes take several years to get cleared up.
2. The 1099-G is so unusual it can't be entered in any of the 1099-G places. This is the best I can come up with since it lists the form and amount.
Follow these steps to enter the income:
- go to the federal income section
- scroll to the bottom
- Miscellaneous Income, 1099-A, 1099-C, Start
- Scroll to the bottom
- Other reportable income, Start
- Other taxable income?
- Select YES
- Description - 1099G for Parental Choice Tax Credit
- Amount, enter your amount
- Continue
Since OK begins with the federal AGI, it will need to be subtracted from the OK return.
@jessicawright @Grace55
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