The Internal Revenue Service (IRS) advised taxpayers in California and 18 other states not to file their taxes yet amidst confusion on whether the state stimulus checks are taxable or not.
The Internal Revenue Service advised taxpayers not to file yet their federal income tax. (Photo: The Japan Times)
IRS Will Release Official Decision Over State Stimulus Check
As the tax season begins, most taxpayers in California and 18 other states are confused about whether the state stimulus checks released in 2022 are taxable or not. The Internal Revenue Service (IRS) said last week that they will release an official decision this week.
According to a published article in Yahoo, the agency advised taxpayers who are uncertain not to file yet their federal taxes until official guidance will be released from the agency. The guidance is expected to affect taxpayers in California and 18 other states.
Stimulus checks given to residents across the country are considered non-taxable but the issue only gets complicated when taxability crosses jurisdiction.
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IRS and Tax Experts Released Statements
An official from the IRS said, “The IRS is aware of questions involving special tax refunds or payments made by states in 2022. We are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers,” according to a published article in The Washington Post.
Additionally, Anette Nellen, CPA and professor at San Jose State University’s Master of Science in Taxation program, also said, “I think the design of the law that authorized California’s payments makes it difficult for the IRS to provide the tax relief that people are seeking.”
She also explained, “California’s law added a provision that the payments are not a tax refund. There is also a statement that the ‘relief’ is for more than COVID. If it had stated it was solely COVID relief, there is a federal law that would have made the payments non-taxable.”
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