IRS Says Rhode Island Special Refund Recipients Should Hold Off On 2022 Taxes

RHODE ISLAND — Some Rhode Islanders should hold off on filing their 2022 tax returns if they received a special inflation relief tax refund or payment from the state last year while the Internal Revenue Service sorts out whether it’s taxable, the agency has said.

Rhode Island is one of 19 with diverse programs last year offering inflation relief payments or refunds for taxes. “We are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers,” the IRS said in a statement Friday.

Taxpayers in the affected states should hold off until they get more information from the IRS, the agency said.

About 115,000 Rhode Islanders were eligible for this tax relief in 2022. Rhode Island's inflation relief targeted residents with children. The relief provided rebates of $250 per child for up to three children for Rhode Island residents making $100,000 a year or less and for joint filers making up to $200,00o.

In some of the states, officials have determined the payments aren’t subject to state income taxes. What needs to be determined if they are taxable at the federal level, Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, told The Associated Press.

In others, people would get taxed if they received a tax refund in 2022 only if they itemize their deductions, Keith Hall, president and CEO of the National Association for the Self-Employed, told The AP. An example of a state that is taking this route is Virginia, which has stated that taxpayers that filed a standard deduction will not be taxed for their tax rebate.

However, not all states have issued guidance on tax rebates.

Other states that offered inflation relief in 2022 were Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, South Carolina, and Virginia.

Following the IRS recommendations is key if taxpayers want to avoid having to amend a previously filed tax return, according to Hall.

“I think the IRS is trying to help people save another filing, if they had to do an amended return,” he told the AP.

The 2022 federal income tax filing deadline is Tuesday, April 18.

• Related: What To Know About Filing Your 2022 Tax Return

If you are not sure if you need to wait to file your taxes, Hall recommends you consult with a tax professional about your specific situation.

The Associated Press contributed reporting.