Yes you will report the Middle Class Tax Refund (MCTR) on your tax return, but it will not be taxable income. The reason it is reported is the form 1099-Misc you received also went to the IRS. When you file your return the IRS will be looking to reconcile that income even if non-taxable.
To enter this form 1099-Misc so that is will not be counted as taxable income:
- Go back to the "Wages and Income" section.
- Locate the "Other Common Income" dropdown
- "Show More"
- "Start/Revisit" the 1099-Misc
- "Yes"
- Enter the form information
- For the reason put CA MCTR
- On the next page be sure to click the button for "This was a California Middle Class Tax Refund (MCTR).
- Finish the interview section.
Now it will not be taxable income on your federal forms and will not transfer to the CA tax return.
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