California 1099 Misc

[aarons421]

Data entry in Turbo Tax for the 1099 Misc received from California for gas tax refunds still appears to be an issue.  The most recent comment in this forum was approximately 4 weeks ago.  The IRS recently issued IR-2023-23 regarding guidance on state tax payments received for general welfare and disaster relief for California and other states.  The CA gas tax refund appears to be in this category, and it does not appear to me to be an MCTR.   The best data entry I find in Turbo Tax is to check the box for MCTR.  This however does not provide the IRS information as to the character of the item and when the IRS compares the lack of taxable 1099 Misc income on the return to the data received from California, it appears that the IRS will calculate an adjustment for additional taxable income and self-employment tax related to Schedule C.   Does Turbo tax plan to issue a program update to resolve?  Perhaps an additional data entry check box is required to allow the program to explain the character of the 1099-Misc to the IRS.  Turbo Tax, please resolve.

[Bsch4477]

Ignore the California 1099-misc. It doesn’t have to be reported. 

[aarons421]

Thanks.  Is there an authority?

[Bsch4477]

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

[aarons421]

Thanks again.  My original inquiry was based on the document you provided by link.  The IRS has no way of knowing the character of the payment from the information included on the 1099-Misc.    I believe a program update is necessary to clarify the character of the payment to the IRS.  A 1099-Misc cannot be ignored.

[MonikaK1]

The media have been using the terms "Middle Class Tax Refund" and "Gas Tax Rebate" interchangeably, when referring to the rebates recently disbursed from the Franchise Tax Board to California taxpayers.

If you are concerned that the funds you received from the Franchise Tax Board weren't related to the MCTR, see this FTB webpage for more information including an option to chat with the agency.

You can still report the California Middle Class Tax Refund as follows:

• 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 taxed on your California or Federal returns.

You can preview your return before filing to find out how your taxes were calculated. See here for details.