The IRS announced that it will not tax most state assistance checks more than two weeks after tax season began on Jan. 23.
Tax attorney Adam Brewer offered this piece of advice to Nexstar: The advice would be to not do anything extreme just yet.
Tax Filing 2023
Wait to see if the Internal Revenue Service (IRS) provides some clarity on this matter because we truly have been going in circles over this whole subject.
In addition to receiving a Middle-Class Tax Refund, many residents of California also received the 1099-MISC tax form, which is intended to report payments that are at least $600. This document was mailed to the citizens of California.
First, we tell people that well, because there’s 1099 Miscellaneous issued it’s taxable, and then the Internal Revenue Service comes back, you know, a month later and says actually, we’re not going to regard it as taxable, Brewer said. Initially, we inform individuals that hey, because there’s 1099 Miscellaneous issued it’s taxable.
The last thing we want to do at this time requires people to file revised tax returns when the Internal Tax Service (IRS) could very well release a new policy stating that they will make the adjustments themselves. So I think that’s the last thing we want to do right now.
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Would You Need To Re-File Yours?
In 2021, with the passing of the American Recovery and Reinvestment Act, several taxpayers found themselves in a similar scenario. But, rather than requiring that individuals re-file their taxes, the Federal Revenue Service (IRS) made the necessary modifications on their behalf.
California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island are the states where taxpayers are not required to record receiving relief payments.
Hawaii, Idaho, Illinois, and Indiana. The Internal Revenue Service (IRS) recently declared that this also applies to energy assistance payments in Alaska that were in addition to the annual Permanent Fund Dividend.
As long as the payment was a refund of state taxes and the individual did not already receive a tax benefit in the year the taxes were deducted, taxpayers in Georgia, Massachusetts, South Carolina, and Virginia will not be required to include state payments on their federal returns and will be exempt from this requirement.
Read more: Social Security update: Who will receive two checks in March?