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California Middle Class Tax Refund question

Forum|Forum|3 years ago
January 12, 2023
2 replies
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Forgive me if this has been answered already. I did a search and I couldn't find the answer. My question is this.

Is the California Middle Class Tax Refund like a tax refund advance? In other words, if after filing my 2022 California tax returns and assuming I would get a refund, will my refund be slightly smaller because of the California Middle Class Tax Refund? I typically owe a little bit each year. Will this increase my California tax liability? Thanks in advance for any answers you can provide.

Best answer by Polkadot1

Set TurboTax to "forms mode" and go to Schedule CA. Lines 28 and 29 is where you deal with the Middle Class Tax Refund. You offset the amount you received (shown on Line 29 if you entered the 1099-MISC from the Franchise Tax Board) by entering that same amount (as a positive number) in Column B of Line 28. It is that simple.

But please note, TurboTax does not handle the offset for you automatically. You have to take these steps manually in Forms Mode. This will reverse it out of your CA taxable income, but you will still pay federal tax on the money.

B

Bsch4477

Employee

While the IRS hasn’t yet been clear about this, it is most likely that this payment will be taxed by the IRS. It is not taxed by California. Keep posted.

R

RobertB4444

As @Bsch4477 says above the IRS may decide to tax the Middle Class Tax Refund as income for federal purposes. They haven't said yet and if you received more than $600 from the refund then you should receive a 1099-MISC from California for the payment.

However, there is no need to enter the payment on your California tax return. The payment you received is not related to your California taxes for 2022. It is also not income in California. So it will not effect your 2022 California return in any way.

@darrendage

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B

Bsch4477

Employee

Still unknown (at least to me) is how TurboTax will correct the payment which will be reported on the federal return so that it’s subtracted from income on the California return.

P

Polkadot1Answer

Set TurboTax to "forms mode" and go to Schedule CA. Lines 28 and 29 is where you deal with the Middle Class Tax Refund. You offset the amount you received (shown on Line 29 if you entered the 1099-MISC from the Franchise Tax Board) by entering that same amount (as a positive number) in Column B of Line 28. It is that simple.

But please note, TurboTax does not handle the offset for you automatically. You have to take these steps manually in Forms Mode. This will reverse it out of your CA taxable income, but you will still pay federal tax on the money.