1099-G for 2024 can't be entered

[srtaylor1317]

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).

[Grace55]

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) 

[DawnC]

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 

[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.  

[VolvoGirl]

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 #.

[VolvoGirl]

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. 

[Grace55]

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.  

[KrisD15]

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:

According to the Tax Adviser:

", 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. 

[jessicawright]

@KrisD15 @DawnC 

This is a state income tax credit. https://oklahoma.gov/content/dam/ok/en/tax/documents/resources/rules-and-policies/agency-rules/emerg... 

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?

[AmyC]

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:

1. go to the federal income section
2. scroll to the bottom
3. Miscellaneous Income, 1099-A, 1099-C, Start
4. Scroll to the bottom
5. Other reportable income, Start
6. Other taxable income?
7. Select YES
8. Description  - 1099G for Parental Choice Tax Credit
9. Amount, enter your amount 
10. Continue

Since OK begins with the federal AGI, it will need to be subtracted from the OK return.

@jessicawright   @Grace55 

[Bi11iard]

Here is my understanding of the 1099-G for the State Income Tax refund versus the 1099-G for the Parental Choice Tax Credit.

1. If you did not itemize in 2024 (for tax year 2023) you can ignore your 1099-G State Income Tax refund because it is not included when using the standard deduction. It also clearly states this on your 1099-G form.
2. The refund was paid in 2024 for tax year 2023, so that is why it is included on your 2024 return if you did itemize in 2023.
3. Likewise, if you do not plan to itemize in 2024, you can ignore the 1099-G for the Parental Choice Tax Credit for Tax Year 2024. It is Tax year 2024, because like your refund, it was RECEIVED in 2024. This has nothing to do with your 2022 tax form that was the basis of what amount you would receive.
4. Like stated elsewhere, Oklahoma was required to send out a 1099-G for the PCTC:

https://oklahoma.gov/tax/individuals/parental-choice-tax-credit.html

Will I receive a 1099-G from the Oklahoma Tax Commission (OTC)?

“Pursuant to Internal Revenue Code § 6050E, a Form 1099-G must be issued for certain types of government payments, including state or local income tax refunds, credits, or offsets. The OTC is required to issue a Form 1099-G to taxpayers who receive a Parental Choice Tax Credit payment. This does not mean the credit is taxable. Please consult a tax professional if you need more information.”

Will I have to pay income tax on the private school tax credit payment?

“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. Please contact your tax professional if you need more information.”

5. So, the tax credit is NOT taxable in Oklahoma, and if you did not itemize, it is not taxable on your Federal since it says you can ignore it.

6. In Turbo Tax (I’m using the desktop version), under “Additional Oklahoma Adjustments, the third item down is the “Parental Choice Tax Credit for Private School”. If you click “Learn More”, you see the following:

“You may deduct any Parental Choice Tax Credit payments received for qualified expenses paid for an eligible student to attend an accredited private school, to the extent such payments are included in your Federal AGI. Provide documentation to support amount claimed and a copy of your federal return.”

If you did not itemize, and therefore did not enter this on your Federal return, you will not enter it here either. If you did not include it on your Federal AGI, you can’t claim it here.

Essentially, if you did not itemize last year, you can ignore the 1099-G State Income Tax refund, and if you do not plan to itemize this year, you can also ignore the 1099-G for the PCTC.

[KrisD15]

To clarify, do you have a question or are you simply sharing information?

@Bi11iard 

[Amcd33]

@DawnC 

Can you clarify the solution provided (BEST ANSWER on this thread)...

You should not enter this on your Federal Tax return for 2024 only? Or should not enter this on your Federal and State Tax returns for 2024?

[DaveF1006]

No.  If you didn't itemize deductions in 2023, the 1099 G isn't reportable income on either your federal or state returns.

[jessicawright]

What if you did itemize on your 2023 tax return? Is the full amount taxable or just the amount equal to the 2023 state tax itemized amount? How do you enter it into TurboTax?