How is Turbo Tax treating the California MCTR payment on the Federal return?

[djaw]

Therefore if the IRS rules the MCTR not taxable it will increase my refund.  Will this delay acceptance or processing of my return.

[MonikaK1]

The MCTR is not taxable on the CA tax return, but no guidance has been provided by the IRS to date as to whether or not it is taxable on the federal tax return. Currently, if you enter the MCTR in TurboTax as a Form 1099-MISC with the MCTR payment in box 3, the program will reflect the payment as a positive amount, as well as a separate negative amount. 

On February 3rd, 2023, the IRS issued a statement suggesting that taxpayers wait for guidance before filing returns with special payments from states for 2022. See this statement from the IRS.

[VolvoGirl]

UPDATE

Feb 10, 2023 IRS has ruled the California Middle Class Tax Refund is NOT taxable
https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

[MonikaK1]

The IRS just issued an updated statement today indicating that taxpayers do not need to report the California MCTR payments as income for 2022.

@djaw 

[bbengr]

If MCTR was claimed on federal form (1099-MISC) and federal taxes filed will IRS correct - or do I need to do an amended return since they finally provided guidance 10 Feb2023?  TurboTax update did not adjust after review of .tax file.

[ErnieS0]

File an amended federal return if you included the California Middle Class Tax Refund in federal income.

The IRS has not said it will correct returns. It only said, “the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return.”

You will not be able to amend your return in TurboTax until later this month. The target date is Feb. 16.

See How to Correct Federal Tax Returns

[suegav57]

I have the same question. I already filed and claimed the (California) MCTR 1099-MISC before the IRS advised waiting.

Now what? Will TurboTax amend it? How can we find out? 

[MarilynG1]

As @ErnieSO stated, the IRS has not said it will correct returns.  Wait until you receive you Refund and see if it is as you originally filed.  If it's different, the IRS may have made an adjustment for you, in which case you should receive a letter from them stating that.  

If it is the same as your original filing, you can Amend your 2022 return.

Here's detailed info on How to File An Amended Return. 

[Lessiemae]

Is Turbo Tax going to update re: MCTR?  Would you advise just leaving the 1099-misc off the tax return as it is still going in as income?

[JamesG1]

You may remove any IRS Form 1099 that you entered for the California Middle Tax Refund.  The income will not be reported on either the Federal or California tax returns.

General welfare and disaster relief payments from the following states are not taxable and should not be included on your tax return.

• Alaska
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Hawaii
• Idaho
• Illinois
• Indiana
• Maine
• New Jersey
• New Mexico
• New York
• Oregon
• Pennsylvania
• Rhode Island

For a list of the specific payments to which this applies, please see this chart.

@Lessiemae 

[eugenevos]

According to FTB: "The MCTR payment is not taxable for California state income tax purposes. You do not need to claim the payment as income on your California income tax return."

The same about IRS, it's not taxable therefore you do not have to report it as aincome