This article answers frequently asked questions about California Middle Class Tax Refund (MCTR) payments in ProConnect Tax. Clients who qualify for an MCTR payment should have received it between October 2022 and January 2023. For more information about payments, see the FTB's website.
The IRS determined that in the interest of sound tax administration, taxpayers in California and other states will not need to report relief payments on their 2022 tax returns.
For more information, see here.
Are MCTR payments taxable?
No. MCTR payments are not taxable income for California state tax or federal purposes.
If you want to enter the MCTR on your client's return
Since this income isn't taxable, no entries are required. Follow these steps if you want to make an entry reporting the MCTR and backing it out as non-taxable.
- On the left-side menu, select Income.
- Click on SS Benefits, Alimony, Misc. Income.
- Click to expand the Other income (Click on button to expand) field.
- Enter a Description and the payment Amount.
- On a new line, enter a Description and the payment Amount as a negative number.
With these entries, ProConnect Tax will report and back out the income on Schedule 1, line 8z when the form is otherwise required.
