Everyone keeps trying to be logical on this problem --- and IRS computers are exactingly logical.
Here's the logic you need to worry about:
- The OK1099-G is for 2024 and show in Box 2, the IRS has that form and IRS computers will try to match that on and to your 2024 return. Once it does not find it, you could trigger a IRS CP-2000 Changes to your Return Letter that you will need to respond to explaining your logic to the computer -- in about 6-9 months from now. So best to put it in the return where the IRS wants to find it and back it out somewhere else with explanation if you are "holding" it over to 2025 --- don't just ignore it or leave it off the return which I have seen suggested. Course that could generate another CP-2000 letter for 2025.
- Oklahoma Statute has the payment as not-taxable for Oklahoma -- but Oklahoma starts with Federal AGI so there might an adjustment you need to make there to reconcile the two and get it off Oklahoma's return
- Oklahoma Statute also is classifying this as a "State Income Tax Credit" so your IRS income calculation for 2024 on this amount is the same as the State Income tax within the Itemized Deduction. Bottom line -- did you get a tax benefit from it -- if not, not taxable or if you don't itemize, not taxable. That is the logic the IRS computers will use so data entry on whatever software you use needs to follow those guidelines for taxable or not in 2024 as to the "tax deduction" generated you got. Keep in mind the SALT limitations if you go over the $10,000 limitation will start eating into that possible taxable amount also.
And finally, the IRS is now in the process of losing 10,000+ employees --- so lots of warm bodies going and coming and covering multiple positions while the IRS computers will be running by themselves 24 hours a day --- using computer matching logic not human logic. "No $6,500 PCTC income on the return but a 1099G -Strike 1"
Keep that in mind as you make your decision how to report, when to report and where to report.
