In order to help the economy, some governments have distributed stimulus aid in the form of inflation relief checks. California’s MCTR (Middle-Class Tax Refund) is one such example. However, experts agree that the lack of clarity regarding the taxable status of these items is causing considerable difficulty.
All Hints Suggest That The Inflation Relief Check Will Not Be Taxable
Californians, for instance, have received MTCR payments that can be anywhere between $200 and $1,050. As per the words of the Tax Board Franchise of California State (SCFTB), while these inflation relief checks can be deemed to be federal income, they remain un-taxable for purposes of the income tax of the state of California. As such, they say there is no need for recording the inflation relief check as further income on IT return for the state of California. It added that a form numbered 1099-MISC will be issued to anybody who got $600 and higher as MCTR.
Regarding the treatment of such payments in relation to federal taxation, the CSFTB recommends consulting either Publication 525 of the IRS, a professional versed with taxes, or Taxable and Nontaxable Income. While the IRS has not yet released directions on whether or not this inflation relief stimulus check can be taxed on federal forms, the San Francisco Chronicle suggests that some big companies handling tax preparation are classifying the check as non-taxable.
Lisa Greene-Lewis, one of the TurboTax representatives, explained to The San Francisco Chronicle that based on information that is currently present as well as their own experience, they understand that these inflation relief stimulus checks are non-taxable at both the state of California as well as the federal level. Customers are receiving direction from them, and they anticipate further information will be made available to them soon.