To enter your Oklahoma 2024 1099-G for the Parental Choice Tax Credit in TurboTax Online, follow these steps:
Sign in to TurboTax Online and open your tax return.
Navigate to the "Federal" section by selecting "Tax Home" from the left-hand side menu or from the main dashboard.
Select "Income & Wages" or "Income" and look for the option to select forms or income like "1099-G."
Search for "1099-G - Other " in the search bar or scroll down to find the category labeled "Government Payments" or similar.
Return to the "Income" Section and Scoll to the the 1099G - Other forms
Enter the details from your 1099-G form:
Once reported the Oklahoma Parental Choice Credit via the 1099-G on the federal side, follow these concise steps in TurboTax for the state return:
Go to Oklahoma State Return: Open the state section in TurboTax.
Find Credits: Navigate to the "Credits" section.
Locate Parental Choice Credit: Search or scroll to find "Oklahoma Parental Choice Credit."
Confirm Details: Verify or enter your information related to the credit (tuition, school details, etc.).
Complete the Return: Review, and TurboTax will apply the credit to your Oklahoma return.
It sounds like your point is that it is appropriate to mis-record the tax refund as a taxable grant or similar government payment. However, the 1099-G I received shows the amount in box 2 and is a state tax credit. And if I look at the Turbotax forms view, I can see that box 2 of a 1099-G is specifically reserved for state tax credits, but only years 2023 and older. Are state tax credits handled the same **everywhere** as taxable grants? TurboTax really just needs to update the form to allow 2024 state tax credits to be entered.
Thank you for the additional information. Since the form is showing the credit, then you do not enter it in the federal. Simply claim the credit in the state portion as an OK adjustment.
@srtaylor1317Where did you end up with this? I've asked a similar question and haven't gotten a satisfactory response.
I do not have a satisfactory conclusion. I realized that for myself, since I itemized in 2023, but do not plan to itemize in 2024, I can disregard the 1099-G for 2024, per box 2 instructions in https://www.irs.gov/pub/irs-pdf/i1099g.pdf.
It isn't helpful to report it as a state grant (as the above response proposed), because it's not. It's a state tax credit reported in box 2, and that means the rules for SALT deductions can impact how much of it is actually taxable.
I haven't tackled the state return yet, per Amy's input above, so that may change my understanding.
A state 1099-G for TY24 is potentially taxable income if you itemized and subtracted your state deductions in 2023. You are confusing years and instructions. Remember, you get your refund the year after you claimed the taxes deduction. IRS on state payments states: Taxpayers who itemize their deductions on their federal income tax returns and receive a state tax refund must include the refund in income only if they deducted the state tax paid. Because of the $10,000 limit on itemized deductions for state income and property taxes, some itemizers are not able to deduct all of the state taxes they paid and do not need to include a refund in income.
Amy,
Thanks for dialoguing on this.
First, it looks like the screen you referenced in the state return is for ensuring the state of OK does not tax the parental choice tax credit, if it was added to federal income.
At issue is how to recognize the credit on the federal return (and therefore taxation at the federal level). For myself, I will not be itemizing in 2024. The reference I was making earlier was to these instructions: "You are not required to furnish a copy of Form 1099-G or a substitute statement to the recipient if you can determine that the recipient did not claim itemized deductions on the recipient's federal income tax return for the tax year giving rise to the refund, credit, or offset." Since the PC tax credit is reported for year 2024 (box 1), and I will not itemize on my yet-to-be-filed 2024 return, my thinking is that I don't need to report it. But if I WAS to itemize in 2024, the question is HOW do I report it? @AmyC
If you did the prior year's tax return with TurboTax (along with the prior year's state return) AND you itemized deductions then TurboTax would prompt you to add the state tax refund that you received as income for the following year.
If you did not prepare the prior year's tax return with TurboTax then you would enter the 1099-G under '1099-MISC and other common income'. The first choice in that section is 'State and Local Refunds Reported on form 1099-G'.
Either way, when entering the information into that section from your 1099-G TurboTax will ask you a whole slew of questions to determine whether your refund is taxable or not.
You have given the exact instructions I have attempted to follow. However, the problem is that this screen only allows entries of 1099-G forms for years 2023 and earlier. I actaully got two 1099-Gs for the state of Oklahoma. The "regular" 1099-G for year 2023 (box 1), and the 1099-G for tax year 2024. However, the TT dialogue does not allow 2024 to be entered for a 1099-G. Any ideas?
If you enter on the line below the state refund line (Other 1099-G Income), it will be taxable in 2024.
While I can "force" the program to recognize the 1099 income using this area of turbotax, I'm not convinced that is the correct answer. The only way to add the 1099 income here is reporting it as income in one of the boxes other than box 2. However, this 2024 1099-G is clearly reporting the income in box 2....
You don't enter it on the 2024 tax return. And if you do end up itemizing in 2024, you will enter it on next year's tax return. Please disregard my previous message, as I see now, the Other 1099-G option was already well covered, my apologies.
But at the top of the form, it says 2024 and when I called the Oklahoma Tax commission they said it needed to be entered on the 2024 return because it was paid in 2024.
Is the amount in Box 2? @Grace55 What year is in Box 3?
From Publication 525 - If you received a state or local income tax refund (or credit or offset) in 2024, you must generally include it in income if you deducted the tax in an earlier year. The payer should send Form 1099-G to you by January 31, 2025. The IRS will also receive a copy of the Form 1099-G. If you file Form 1040 or 1040-SR, use the worksheet in the 2024 Instructions for Schedule 1 (Form 1040) to figure the amount (if any) to include in your income. See Itemized Deduction Recoveries, later, for when you must use Worksheet 2, later in this publication. If you could choose to deduct for a tax year either:
• State and local income taxes, or
• State and local general sales taxes,
then the maximum refund that you may have to include in income is limited to the excess of the tax you chose to deduct for that year over the tax you didn't choose to deduct for that year.
Box 1 says 2024; Box 2 will have the amount of the Parental Choice Tax Credit that was received. There are no other boxes labeled (just info like TP's SSN, address, etc). In general, many will also have received a a 1099-G with a different number for 2023 (box 1).
As noted by another member. There are no other numbered boxes.
The 1099-G has a box 1 for the tax year and
box 2 for the amount.
At the top it has:
OMB NO: -(listed)-
2024
Form 1099-G
Address and payer and recipient info is also listed.
Then:
Box 1. Tax Year
2024
Box 2. State Refund
(amount listed)
If you do not take a tax deduction for that income, you do not need to include it with your income, as it is not taxable. So, if you take the standard deduction, you do not need to include it.
Tax Benefit Rule - if an amount (as of a loss) used as a deduction in a prior taxable year is recovered in a later year it must be included in the gross income for the later year to the extent of the original deduction.
Note: If the amount of the loss was not taken as a deduction in the year the loss occurred, the recovered amount is not counted as income. @Grace55
I am itemizing for 2024 so based in the instructions on the 1099-G I do have to include it for the tax year 2024.
I have emailed the OTC commissioner to try to get a clear answer. With this being a new program, I believe there are many with questions and probably some mistakes have been made/are being made.
That doesn't sound like a regular 1099G. On a 1099G box 1 is for unemployment. Box 2 is a state refund and the year on the right doesn't have a box #.
For a state tax refund. You received it in 2024 for a 2023 return or prior year. Did you itemize on your 2023 return? A State Tax Refund is taxable if you itemized deductions on that prior year's federal return and took a deduction for state income taxes instead of the sales tax. You got a deduction benefit for it so now you have to include it as income. If you took the Standard Deduction it is not taxable and you don't need to report it. Check your 1040 line 12 to see which deduction you took.
The picture you posted is not the 1099-G that was received. It is exactly like the state refund 1099-G except the tax year and amount is different. The tax year listed in the box is 2024 on the 1099-G for the parental choice tax credit. The tax year listed for the separate state refund (overpayment) is 2023.
I get that the state refund was for overpayment for 2023 and I received in 2024--which is why if I itemized in 2023, I would list this and file along with my 2024 return.
This is why I believe the state made a mistake by noting tax year "2024" as the tax year as they utilized 2022 for the decision making and eligibility requirements for the parental choice credit. I agree it should be filed along with 2024 tax return but disagree that the tax year should have been for 2024. And simply inputting 2023 when the eligibility wasn't based off of that and also, that's not what is in the box, doesn't make any more sense to me for this particular situation.
I would argue that this it not a state tax refund, it's a tax credit.
It isn't based on state tax paid in any year, it's based on the Adjusted Gross Income of the Federal 1040 filed for two years prior. The credit has two amounts depending on the AGI. This is not a tax since the amount is not directly related to the amount of income.
The 2024 credit is based on the AGI of the Taxpayer's 2022 Federal Return. It is not based on the state tax paid.
The dollar amount is sent to the school, not the Taxpayer.
I personally do not think the credit is taxable on a federal return based on:
", the IRS explained that the original recipient of the state tax credit “is not viewed as having received property in a transaction that results in the realization of gross income.”
According to the State of Oklahoma:
"for the tax year 2024 and subsequent tax years, if an Oklahoma taxpayer incurs or will incur a qualified expense on behalf of an eligible student during the tax year, the taxpayer may be eligible to claim the private school tax credit."
According to The Honorable Richard L. Hanna U.S. House of Representatives
“Generally, a state income tax credit is treated for federal income tax purposes as a reduction or potential reduction in the original recipient's state tax liability to the extent that the taxpayer can only apply the credit against a current or future tax liability. Consequently, an original recipient of a state income tax credit is not generally treated as having an accession to wealth that results in gross income under section 61. Additionally, when an original recipient of a state income tax credit applies the credit to reduce a state tax liability, the taxpayer has a lower deduction for state tax under section 164 of the Code.”
If anything, I might see this as reducing (or eliminating) the deductibility of state school tax paid on the 2024 federal return.
This is a state income tax credit. https://oklahoma.gov/content/dam/ok/en/tax/documents/resources/rules-and-policies/agency-rules/emergency-rules/2023-PCTCEmerRule.pdf
The check is sent to the school, but it is in the taxpayer's name. The taxpayer is required to sign it over to the school if the taxpayer has an amount due to the school.
Is the state income tax credit taxable income on the federal return? If so, how do you enter it into TurboTax?
1. For most people, yes it is taxable on the federal, at this time. Yes it is a state credit, great job with the link. The problem lies in the last bullet at the bottom of the page on the Oklahoma Tax Commission website. It states:
HB3388 exempted the Parental Choice Tax Credit from Oklahoma income tax.
The Oklahoma Tax Commission cannot make a determination on whether a Parental Choice Tax Credit payment is taxable to a taxpayer for federal income tax purposes; that determination is based on each taxpayer’s individual facts and circumstances.
The only way for additional income to not be taxable is if your taxable income is below the taxing levels. This indicates that the income should be added to the federal for now. It may become exempt at a later date but it isn't specifically exempt. I do agree with @KrisD15 that this doesn't make sense as taxable on the federal and would expect it to become exempt and require an amended return. Nothing clearly states taxable or not and we have seen this with other states sometimes take several years to get cleared up.
2. The 1099-G is so unusual it can't be entered in any of the 1099-G places. This is the best I can come up with since it lists the form and amount.
Follow these steps to enter the income:
Since OK begins with the federal AGI, it will need to be subtracted from the OK return.