Assuming your question is about the CA Middle Class Tax Refund (MCTR) you are correct the amount is non-taxable. You probably received a form 1099-Misc which is how you enter the amount. The latest update in TurboTax should correctly handle the MCTR payment.
- Go back to the "Wages and Income" section.
- "Edit" the 1099-Misc
- "Delete" the form entry
- Click "Done"
- On the summary page scroll down to "Other Common Income"
- "Revisit" the 1099-Misc topic
- Re-enter the form information
- You will arrive at a page titled "Does one of these uncommon situations apply?"
- Click the button "This was a California Middle Class Tax Refund (MCTR)
- Finish the interview section.
This will automatically exclude this amount from federal income. On the federal tax return, the MCTR payment will reflect as a positive amount, as well as a separate negative amount.
Both the positive and negative amounts will show on line 8z on the Schedule 1. You can see these entries in the forms view for desktop versions or in the online versions by following these steps:
- "Tax Tools" in the left hand menu
- "Tools"
- "View Tax Summary" in the main screen
- "Preview my 1040" in the left hand menu
The income will no longer be in the Federal Adjusted Gross Income amount and therefore will not transfer to the CA tax return either.
