Guidance on the federal tax status of 21 states’ inflation relief checks made in 2022. (Photo: New York Post)
The Internal Revenue Service (IRS) issued guidance on the federal tax status of 21 states’ inflation relief checks made in 2022, determining that taxpayers in many states will not be required to report these payments on their 2022 tax returns.
California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island taxpayers who received inflation relief checks do not need to report these state payments on their 2022 tax return.
What about state taxes paid?
Residents of Georgia, Massachusetts, South Carolina, and Virginia who did not receive a tax benefit from a state tax refund, whether they claimed the standard deduction or itemized deductions, do not include the payment as income.
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Guidance on the federal tax status of 21 states’ inflation relief checks made in 2022. (Photo: FinanceBuzz)
Californians may face additional filing difficulties.
California residents who received more than $600 for their “Middle Class Tax Refund” already received a 1099-MISC form, which means that if the state does not amend and reissue the forms, there will be a mismatch, which may cause refunds to be delayed or require filers to contact the IRS to resolve the situation.
Will I Be Sent a Tax Form?
According to the IRS, taxpayers who receive a state tax refund typically receive a 1099-G.
Whether your state income tax refund is taxable on your federal income tax return depends on whether or not you took an itemized deduction for the tax that was later refunded. If you did not itemize your deductions on your federal tax return for the tax year that generated the refund, do not report any of the refunds as income.
As previously reported by GOBankingRates, seventeen states issued inflation relief checks in 2022, including Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Jersey, New Mexico, New York, Pennsylvania, South Carolina, and Virginia. Individual payments ranged from $50 to $1,050, depending on the recipient’s state and income level.
