Where do I enter the California 1099 MIsc for the MCTR I received?

[lharthur12]

Cannot find anywhere to reclaim the payment entered on Schedule 1 line 8

[Bsch4477 · Accepted solution]

To report on Federal >Income >choose what I want to work on >Other common income >1099-misc>other income. Report the Middle Class Refund and follow the prompts. 

On California section you will see HERE’s INCOME THAT CALIFORNIA HANDLES DIFFERENTLY. Scroll down to Miscellaneous and scroll down to MIDDLE CLASS TAX REFUND and follow the prompts to exclude the income from CA. 

[lharthur12]

Thanks for the accurate reply!

I wish the IRS would make a ruling on this topic!

[mrshikerrose]

When will the IRS make a ruling and how will I know??

[Bsch4477]

Unknown. If there is no ruling that the payment is exempt it means it is taxed. 

[mc023]

we’re your returns accepted? 

[mrshikerrose]

I have not filed yet, waiting for IRS and their ruling. 

[Slow Reader]

Now excluded from federal and CA taxes!

[mc023]

Is this verified via IRS or news?

[mrshikerrose]

This is for IRS, 1099 MISC.  Turbo Tax help line said they are waiting for the ruling from IRS, if they will be counting as income or not.  I think it should be a NO!

[mc023]

It should be not taxable for federal but doesn’t matter right now as a lot of e-files getting rejected due to the MCTR and waiting on an update?

[Ivndrte]

My return was rejected and I am getting error. CA_MCTR Payment 

Are you seeing the same error?

[lharthur12]

I would imagine that when it becomes official from IRS either way, Turbotax will issue an update?

[DianeW777]

Since we have no actual written authority from the IRS as of now, and this is a refund of California (CA) tax which would have been considered income earned and taxed previously, i.e., refund of tax, it should not be taxable unless you specifically deducted tax through itemized deductions in a prior year.

Our tax expert @VolvoGirl has also provided additional guidance specific to your question:

• 'There was a new Turbo Tax program update yesterday on Jan 26, 2023.  The CA MCTR is now not taxable for federal and state.  When you enter the 1099Misc box 3 it should ask ....Do any of the uncommon situations apply?  And in my Desktop program the 3rd item listed is California Middle Class Tax Refund. 
• When you click on that then at the bottom it will say....The California Middle Class Tax Refund (MCTR) will not be taxable on your California or federal returns.

@Iharthur12

[mc023]

Have you tried e-file and did it go through?