The Internal Revenue Service doesn’t know if they will tax those checks…..
This is NOT gonna help the agency in the minds of the Republicans, who have been on their case….
This IS going to make things worst for taxpayers and tax preparers ….
One doubts there will be a significant amount of people waiting for the IRS to make up it’s mind on this….
“For taxpayers uncertain about the taxability of their state payments, the IRS recommends they wait until additional guidance is available or consult with a reputable tax professional,” the agency said. “For taxpayers and tax preparers with questions, the best course of action is to wait for additional clarification on state payments rather than calling the IRS.”
Faced with a glut of excess revenue stemming from wage gains in 2021 and 2022, nearly two dozen states issued payments to combat inflation over the summer. California’s middle-class tax refund distributed payments worth between $200 and $1,050; close to 16 million taxpayers have received the payouts already, and 23 million are eligible….
New York awarded inflation relief payments worth $270 for average-to-low-income residents and enacted rent and property tax relief. Oregon sent one-time $600 checks to low-income households, and Georgia gave tax filers a $500 credit after they submitted their 2021 return.
The tax status of those payments will vary by state, and depends on the program’s stated purpose, tax professionals say.
If the payments were for pandemic relief, for example, they should be exempt from federal tax because they fall under disaster relief. If they were for inflation or other economic relief, they’re probably taxable….
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