topic Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable? in Get your taxes done using TurboTax

Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

CA_Joe — Mon, 23 Feb 2026 10:19:37 GMT

I got a 1099-MISC for an amount over $600, was surprised.

Generally, items of income are taxed for Fed unless expressly excluded by Code.

This matter is unclear, for Fed but not for CA. Different answers from different sources.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

Bsch4477 — Tue, 24 Jan 2023 20:48:30 GMT

The IRS has not yet said that the payment is tax exempt and lacking that it would appear to be taxed. TurboTax program has anticipated this.

To report on Federal >Income >choose what I want to work on >Other common income >1099-misc>other income. Report the Middle Class Refund and follow the prompts.

On California section you will see HERE’s INCOME THAT CALIFORNIA HANDLES DIFFERENTLY. Scroll down to Miscellaneous and scroll down to MIDDLE CLASS TAX REFUND and follow the prompts to exclude the income from CA.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

DianeW777 — Tue, 24 Jan 2023 20:57:38 GMT

The Tax benefit rule, IRS Publication 525, will determine if it is taxable on the federal return.

You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.

If any of the amount was used as a deduction on your federal return in 2021, then some or all of it may be taxable on the 2022 return.

@CA_Joe

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

CA_Joe — Thu, 26 Jan 2023 23:53:20 GMT

Understand. Has TT expressly requested an answer from the IRS? How will I know if they do answer and if the income is determined to be not taxable?

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

DianeW777 — Fri, 27 Jan 2023 18:32:51 GMT

Since we have no actual written authority from the IRS as of now, and this is a refund of California (CA) tax which would have been considered income earned and taxed previously, i.e., refund of tax, it should not be taxable unless you specifically deducted tax through itemized deductions in a prior year.

Our tax expert @VolvoGirl has also provided additional guidance specific to your question:

'There was a new Turbo Tax program update yesterday on Jan 26, 2023. The CA MCTR is now not taxable for federal and state. When you enter the 1099Misc box 3 it should ask ....Do any of the uncommon situations apply? And in my Desktop program the 3rd item listed is California Middle Class Tax Refund.
When you click on that then at the bottom it will say....The California Middle Class Tax Refund (MCTR) will not be taxable on your California or federal returns.

@CA_Joe

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

Slow Reader — Sat, 28 Jan 2023 02:38:56 GMT

That is now fixed. However, filing is rejected by Federal and CA state today 4 times. Hopefully this will be fixed in next Thursday's update.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CURTISS — Sat, 28 Jan 2023 19:42:10 GMT

The Federal is still taxed after doing this

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CURTISS — Sat, 28 Jan 2023 19:46:35 GMT

It still shows up as other income on schedule 1 Line 8z so nothing has been fixed.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

Chucker689 — Sat, 28 Jan 2023 20:18:01 GMT

The MCTR was not a refund of prior income tax, so it could not have been deductible in a prior year as such. For this reason the MCTR was reported on 1099-misc, not a 1099-G. While it’s called a tax refund, it’s not clear what type of tax or if such a tax was ever deductible on a personal Fed return.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

Kkulkev21 — Sun, 29 Jan 2023 03:42:58 GMT

It came up as "not taxed at both federal or state level" on my return and I just submitted and both State and federal were accepted without any problems.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CA_Joe — Sun, 29 Jan 2023 03:45:42 GMT

I am nowhere near filing, but have a draft return in progress that I continue to tweak. Just checked, federal still shows the amount on Form 1040, line 8 as taxable.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CA_Joe — Sun, 29 Jan 2023 03:47:23 GMT

My amount was over $600 ... the level that generated the CA 1099-MISC.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

Kkulkev21 — Sun, 29 Jan 2023 04:08:45 GMT

Not sure why you are seeing as being taxed. In my case, deleting it and adding it back on, didn't make any changes to my refund amount. Again, I didn't look at the return in "Forms" view but in my case, I didn't see the amount being taxed.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CA_Joe — Sun, 29 Jan 2023 04:52:35 GMT

Just re-checked, still makes noticeable difference. Deleted, then restored.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

JamesG1 — Sun, 29 Jan 2023 19:41:01 GMT

Have you tried deleting the 1099-MISC and re-entering following these steps?

Select Federal from the left side menu.
Click on Wages & Income.
Scroll down to Other Common Income. Click Show more.
Click Start / Revisit to the right of 1099-Misc.
At the screen Does one of these uncommon situations apply? select This was a California Middle Class Tax Refund.

The California Middle Class Tax Refund will not be taxable on your California or Federal returns.

View the entries at Tax Tools / Print Center / Print, save or preview this year's return / Include government and TurboTax worksheets.

@CURTISS

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

CA_Joe — Sun, 29 Jan 2023 20:23:36 GMT

TY. I did not find exactly all of what you mentioned, including no specific item to click for Middle Class Tax Refund. But, after completing info/questions presented in TT for 1099-MISC, the system accepted and did NOT treat the amount (over $600) as taxable.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is t...

LindaS5247 — Sun, 29 Jan 2023 20:46:38 GMT

The MCTR is not taxable on the CA tax return, but no guidance has been provided by the IRS yet as to whether or not it is taxable on the federal tax return. If you received a 1099-MISC with the MCTR payment in box 3, you should go through the comprehensive 1099-MISC flow steps in TurboTax to enter the amount.

There will be a question asking if the payment is for the California Middle Class Tax Refund. Select “Yes” to 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, based on the OII.

Therefore, TurboTax software is not treating this payment as taxable income.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

Walt119 — Tue, 31 Jan 2023 23:30:49 GMT

Here's a new wrinkle. In 2021 I lived in California. During the first week of January 2023 I moved to Post Falls, Idaho.

It does not appear to be taxable in either state. I removed it from my state return completely. I did all

proposed fixes from the community board and apparently neither state nor federal will fie until this is resolved. I am not comfortable with removing the MCTR from my federal return even though I am confident that it will not result in additional taxes at my income level. I am pointing this out because of the unusual circumstances of getting a CA MTCR from 2021 received in 2022 and filled in 2023. Please remember that any solution must take these circumstances into account I am sure I am not the only in this boat. AT this point I am not sure where the problem is but I am distressed that I pad money to INTUIT for filing my taxes and a week later I have no end in sight. I would like a current answer from some one at TURBO TAX with a viable expectation on what and when a fix will be available. Neither the Federal government nor the state are entitled to more money but I can get mine? This is rediculous.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

CA_Joe — Wed, 01 Feb 2023 00:05:04 GMT

I have no need to file yet, likely will wait until at least early April. By then, TT might have something more definitive on this.

But for now, I share the concern. I noted previously that, in the eyes of the law, Rev. Code Sec. 1001 provides that any item of income is taxable ... unless expressly provided otherwise. Of course, the tax code is replete with exceptions!

TT has connections to the IRS that most folks don't, and perhaps can lean on them to get a clarifying answer. Meanwhile, I am not convinced that TT's answer is right. There must be actual authority ... Code, Reg., or other official IRS pronouncement ... to support excluding MCTR from taxable income. Without cite to such authority, I am uncomfortable relying on TT's opinion, however well-founded it might be.

Of course, the tax effect on the income amount is not very material. If I exclude it and they later hit me up for tax, it's not a biggie. If I include it and it turns out not to be taxable, I could amend the return; but that can open Pandora's Box. If I exclude and they seek additional tax, likely they would not hit me with penalty; as, relying on TT's opinion that affects maybe thousands of filers might be seen as reasonable basis for excluding. In which case, adjustment but no penalty.

Re: Has TT received any specific IRS guidance, on whether 2022 CA gas tax / inflation rebate is taxable?

CA_Joe — Sat, 04 Feb 2023 05:00:12 GMT

This matter is now clearly getting high-level attention ... as it should have much earlier, even before CA sent forms 1099-MISC.

“IRS says guidance on whether Middle Class Tax Refund is taxable could come next week”

https://www.kcra.com/article/rep-kiley-calls-for-irs-to-issue-guidance-on-whether-middle-class-tax-refund-is-taxable/42748174#

Of course, be care what you wish for! The answer might not be what one seeks.