IRS issues state rebate guidance for taxpayers encouraged to delay filing
IRS on Friday Federal tax guidelines issued to millions of Americans who received state rebates or payments in 2022.
The announcement came about a week after the agency called those taxpayers postpone filing while it determines whether the funds are taxable on federal profits.
“The IRS has determined that, in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.” the agency said. said in a statement.
The agency said taxpayers in California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island will not need to report. fox these payments on their federal tax return. Some Alaska taxpayers may also avoid federal taxes on certain payments.
Taxpayers in Georgia, Massachusetts, South Carolina, and Virginia may also omit federal tax reporting on some payments. But eligibility may hinge on factors from your previous tax records.
Californians may still face filing challenges
“This is the right judgment of the IRS,” said Adam Markowitz, a registered agent and vice president of Luminary Tax Advisors in Windermere, Florida. “It’s not fair to punish taxpayers late in the game if they’re going to change anything.”
However, he said there could be challenges for California taxpayers because the state has issued them a 1099-MISC form for payments of more than $600, which reports “Tax Refund for Floors.” middle class” is a taxable payment to the IRS.
More than 16.5 million California taxpayers received the payment, according to state reports. Franchise Tax Council. Overall, more than 31.6 million residents benefit including taxpayers and their dependents.
“The state of California has really put people at a disadvantage by issuing 1099-MISC [forms]”, Dan Herron, a certified financial planner based in San Luis Obispo, California at Elemental Wealth Advisors. He is also a certified public accountant.
If the state does not amend and reissue those forms to the IRS, the state may cause nonconformity when California taxpayers file their federal tax returns, he said.
Usually, the mismatch between tax form and returns will trigger an automatic notification, which may delay the refund or require the taxpayer to contact the IRS to resolve it.
“I don’t know how the IRS system would handle that,” added Herron.