California Middle Class Tax Refund 2022

It's not taxable by CA and it's not taxable by the feds. I advise you to add the amount from the CA 1099-MISC as Other Income. Call it Nontaxable CA MCTR. Then create another entry as an adjustment to gross income with the same name. The income should go on Schedule 1 Line 8z and the adjustment on Schedule 1 Line 24z.

It is not taxable by State or Feds.

The State issued guidance on its website. The IRS dithered for a while, but eventually declared that it would not be taxable, under the "general welfare" exception:

The State issued 1099s anyway, as part of their generally non- taxpayer-oriented way of operating. No doubt they figured that if they issued one when it was unnecessary _they_ wouldn't have a problem. It was irrelevant to them that millions of people were at risk of overstating their taxable income because the State issued an unnecessary form.

In general, not just in this case, just because you receive a 1099 doesn't necessarily mean the money was taxable; and if you don't receive a form the money might still be taxable. The law is that you're responsible for stating your income accurately, even if the payor messes up.

Alan, Thanks a lot.

Thanks Stan.