From awesome Expert @ErnieSO:
Yes. Remove any Form 1099 that you entered for the California Middle Tax Refund. Otherwise, TurboTax will include it in your federal income.
The IRS has not said it will fix returns that claim the MCTR.
General welfare and disaster relief payments from the following states are not taxable and should not be included on your tax return.
- Alaska [1]
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Hawaii
- Idaho
- Illinois [2]
- Indiana
- Maine
- New Jersey
- New Mexico
- New York2
- Oregon
- Pennsylvania
- Rhode Island
For a list of the specific payments to which this applies, please see this chart.
@jsaylor
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