As of 2/10/2023 the IRS has changed their guidance on these state tax refunds including the California Middle Class Tax Refund. You can review that IRS notice here.
This income is no longer taxable and you will not report the amount on your federal return. Please keep the 1099-MISC for your records only.
If you previously reported this 1099-MISC income on your federal return, you can remove the entry described below and amend your return. Amended Return instructions can be found here.
If you received form 1099-Misc from the California Franchise Tax Board, you may need to claim the income on your federal return and then subtract it form the state return.
To report the income on your federal return, follow these steps:
- Federal Section
- Add the 1099-Form
State Subtraction Entry
Since this is not taxable to California, you will need to subtract the payment from the CA return. Please follow these steps to subtract the payment from your state return:
- State Section
- Subtractions from Income
- Other Subtractions
- Enter the description as "CA MCTR PAYMENT "
- Enter the amount of the 1099-Misc payment