Who Is Eligible for the $800 Middle Class Tax Refund?
Find definitive answers on the one-time Middle Class Tax Refund. Learn the key factors that determined who qualified for a payment and the amount they received.
Recent searches for an “$800 tax credit” often lead to information about the California Middle Class Tax Refund (MCTR). This was a one-time payment program designed to offer financial relief to eligible residents, with many payments falling in the searched amount range.
This initiative was not a traditional tax credit but a direct payment to individuals and families who met specific criteria. The payments were issued automatically to those who qualified, meaning no application was necessary.
Eligibility for the Middle Class Tax Refund
To qualify for the Middle Class Tax Refund, several conditions tied to the 2020 tax year had to be met. The primary requirement was the timely filing of a 2020 California state income tax return by the October 15, 2021, deadline.
Residency was another requirement. An individual must have been a California resident for at least six months during the 2020 tax year and also be a resident of California on the date the payment was issued.
A person’s dependency status was also a factor in determining eligibility. To receive the payment, an individual could not have been eligible to be claimed as a dependent by another taxpayer in the 2020 tax year.
Specific income thresholds based on California Adjusted Gross Income (AGI) from the 2020 tax return were also enforced. For those filing as Single or Married Filing Separately, the AGI had to be $250,000 or less. For those filing as Married Filing Jointly, Head of Household, or Qualifying Widow(er), the AGI limit was $500,000 or less.
Calculating the Payment Amount
The amount of the MCTR an eligible individual or family received depended on three factors from their 2020 state tax return: filing status, California Adjusted Gross Income, and whether they claimed one or more dependents. The payment amounts were structured in tiers, with lower-income households and those with dependents receiving larger payments, up to a maximum of $1,050.
For example, a married couple filing a joint return with a California AGI of $150,000 or less who claimed at least one dependent received the maximum $1,050. If that same couple had no dependents, their payment was $700. A single filer with an AGI of $75,000 or less received $700 if they had a dependent, but only $350 if they did not.
The payment tiers continued for higher earners. A Head of Household filer with an AGI between $150,001 and $250,000 received $500 with a dependent and $250 without one. For married couples filing jointly in the AGI bracket of $250,001 to $500,000, the payment was $600 with a dependent and $400 without.
Payment Distribution
The California Franchise Tax Board distributed MCTR payments through direct deposit and prepaid debit cards. The method used for a recipient depended on how they filed their 2020 state tax return. Individuals who e-filed their 2020 return and received their tax refund via direct deposit received the MCTR payment the same way. These direct deposits were issued between October 7, 2022, and November 14, 2022.
Other eligible recipients, including those who received a paper check for their 2020 tax refund or had a balance due, were sent a debit card by mail. The distribution of these debit cards began in late October 2022 and continued into January 2023.
Federal and State Tax Implications
The Internal Revenue Service (IRS) issued guidance stating that MCTR payments would not be subject to federal income tax. The IRS treated the payment as a disaster relief payment for general welfare.
From a state perspective, the payment was also not considered taxable income. The California legislation that authorized the MCTR excluded these payments from the gross income of recipients. Therefore, individuals who received the payment did not need to report it as income on either their federal or state tax returns.