Current:Home > MyRobert Brown|If you got inflation relief from your state, the IRS wants you to wait to file taxes -Elevate Profit Vision
Robert Brown|If you got inflation relief from your state, the IRS wants you to wait to file taxes
Algosensey Quantitative Think Tank Center View
Date:2025-04-07 19:58:14
We're two weeks into tax season,Robert Brown but the IRS is urging people in at least 19 states to hold off on filing their tax returns. The reason? The agency is still figuring out how to handle special tax refunds and other payments states issued in 2022.
Many of the payments have been dubbed inflation relief checks. But even on the basic level, they reflect a hodgepodge of rules and eligibility requirements.
Taxpayers from California to Maine now find themselves in this confusing situation, as the IRS works to apply its rules to a wide range of programs. The agency has promised to share clarification this week, "for as many states and taxpayers as possible."
Here's a quick rundown of where things stand:
What should taxpayers do right now?
The rules involved "are complex," the IRS said — and so is its advice.
The IRS says people should wait to file tax returns if they're not sure if the money they got from states is taxable at the federal level.
But at the same time, the agency suggests people who have already completed their federal tax return might not need to worry about it, stating, "We also do not recommend amending a previously filed 2022 return."
The IRS did not respond to NPR emails on Wednesday seeking clarification of the rules, what taxpayers should do, and when it would issue guidance.
How do these state programs work?
People in many states got checks or direct deposits without even having to apply, through broad stimulus or inflation relief programs. Some programs set income limits, while others sent money to anyone in the state who filed their taxes on time in the previous year.
Some states, like Illinois, issued tax rebates tied to criteria such as payment of property tax. And others, like Florida and Rhode Island, singled out households with dependent children.
Which states are affected by the tax-season limbo?
The IRS did not list all of the states where it's looking at "questions involving special tax refunds or payments" from the past year.
There are differing reports of which states' programs might fall under the IRS review. The Associated Press says 19 states are in question, and Forbes agrees with that figure. But the financial advice site Ramsey Solutions lists additional states, such as New York and Pennsylvania. Marketwatch puts the number at around 20.
The IRS says it's working with tax officials in those states to determine how taxpayers who live there should handle the payments on their returns.
Why did states give out this money?
Many of the special programs were spurred by a rare confluence: right as consumers were hit with sharp rises in inflation, many states were seeing record budget surpluses from increases in tax revenues, federal pandemic aid and other sources.
In some cases, the payments were small, as low as $50-$75, meaning they're not likely to make a big impact on a tax return. But many states tacked on hundreds of dollars for families with multiple dependent children. In California and Colorado, taxpayers saw checks that range up to and over $1,000, and a few other states weren't far behind.
What have states been saying about taxes?
In many cases, state officials have assured taxpayers the stimulus or relief money wouldn't be taxable under state law. But taken as a whole, that advice is complex, much like the IRS guidance.
Delaware, for instance, says that its rebate "is not subject to State of Delaware income tax," while adding that individual tax situations may differ.
Virginia's FAQ page on its rebate says taxpayers who itemized their deductions might need to report the rebate — up to $500 for joint filers — on their federal return.
Idaho leaves it more open-ended: "Rebates are handled exactly like regular refunds; they're not taxable to Idaho. However, they might be taxable on the federal level."
veryGood! (634)
Related
- Backstage at New York's Jingle Ball with Jimmy Fallon, 'Queer Eye' and Meghan Trainor
- 'Deadliest weather we have': Heat blasts East with 100-plus degrees; floods swamp Midwest
- As homeowner's insurance prices climb, more Americans ask: Is it worth it?
- Q&A: What’s in the Water of Alaska’s Rusting Rivers, and What’s Climate Change Got to Do With it?
- As Trump Enters Office, a Ripe Oil and Gas Target Appears: An Alabama National Forest
- Mining the Sun: Some in the Wyoming Epicenter of the Coal Industry Hope to Sustain Its Economy With Renewables
- NHRA legend John Force taken to hospital after funny car engine explodes
- Red Lobster is open in 44 states – even in bankruptcy. See every location in your state
- Retirement planning: 3 crucial moves everyone should make before 2025
- Summer camps are for getting kids outdoors, but more frequent heat waves force changes
Ranking
- Small twin
- Gen X finally tops boomer 401(k) balances, but will it be enough to retire?
- Israel's Netanyahu appears at odds with White House and Israel's military over war with Hamas in Gaza
- As U.S.-supplied weapons show impact inside Russia, Ukrainian soldiers hope for deeper strikes
- As Trump Enters Office, a Ripe Oil and Gas Target Appears: An Alabama National Forest
- Cheetah cub 'adopted' by mother at Cincinnati Zoo, increasing his chances at survival
- 2028 LA Olympics: Track going before swimming will allow Games to start 'with a bang'
- Prince William Dancing to Shake It Off at Taylor Swift Concert Is a Must-See Moment
Recommendation
Google unveils a quantum chip. Could it help unlock the universe's deepest secrets?
Robert Pattinson Breaks Silence on Fatherhood 3 Months After Welcoming First Baby With Suki Waterhouse
Who owns TikTok? What to know about parent company ByteDance amid sell-or-ban bill for app
Mexican-born NASCAR driver Daniel Suárez becomes US citizen: 'Did it my way'
'Malcolm in the Middle’ to return with new episodes featuring Frankie Muniz
6 people shot in Rochester, New York, park as early morning argument erupts in gunfire
A charge for using FaceTime? Apple made no such announcement | Fact check
2 hospitalized after lightning strike near PGA tournament in Connecticut