Are State Stimulus payments taxable on the Federal return?

[ph451]

CA-MCTR is non taxable.   1099 Misc reports income (send to 1040 Line8).

ADJUST ON SCH 1 line 8  as a negative amt with description CA-MCTR  

[ShawnC753]

I get that, but then it would make sense that I would not be assessed taxes on it either.  Without the 1099-M added let's say the refund was $800, then adding the 1099-M the refund went to $640.  So, when you zero it out on line 8 using CA-MCTR, shouldn't the refund return to the $800?  Since this is no longer affecting your AGI?

Thanks!

[ph451]

when entering  the 1099-M  send the income to 1040-line 8.   adjustment is a negative amt on sch1 line 8.

That zeros out the 1099M income.  There is no change to the bottom line if you enter the income and adjustment at the same time.  

[ph451]

make sure you enter the Adjustment as a negative

[Vanessa A]

You do not need to make any adjustments or zero anything out.  TurboTax has boxes to check to say this is the MCTR and will handle it without any manual changes. To enter your 1099-Misc for the Middle Class Tax Refund you will select the following:

• Federal
• Wages and Income
• Show More next to Other Common Income
• Start next to the 1099-Misc
• Enter the information from your 1099-Misc
• Continue
• Enter the reason for the 1099-Misc as MCTR
• Then on the next Screen choose This was a California Middle Class Tax Refund

This will exclude it from your taxable income.