Business & Tech
IRS: Special Refund Recipients In 19 States Should Delay Filing Taxes
The Internal Revenue Service is sorting out if special inflation tax relief refunds and payments are taxable at the federal level.
ACROSS AMERICA — Taxpayers in 19 states who received special inflation relief tax refunds or payments from their states last year should delay filing their 2022 federal income tax returns while the Internal Revenue Service sorts out whether it’s taxable, the agency has said.
Nineteen states — Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, and Virginia — put together 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, asking that affected taxpayers hold off on filing their returns.
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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.
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However, not all states have issued guidance on tax rebates.
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.
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.
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