Tens of millions of taxpayers who received the subsidies would not be subject to federal tax collection against state-issued inflation relief payments or tax refunds, the Internal Revenue Service announced on Friday.
An unexpected request from the IRS, which has typically urged taxpayers to file their taxes as soon as possible, was for people to postpone completing their forms while authorities investigated whether the state payments were federally taxable. The tax filing period begins on January 23.
Following Friday’s announcement, tax returns inflation relief can now be filed in more than 20 states. According to the agency, there will be no taxes deducted from state payments or tax refunds for residents of Alaska, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island. They also won’t need to report them on their inflation relief.
The governor’s office issued the $850 inflation relief checks, which were finished in January 2023. However, state citizens will soon receive an additional stipend.
In addition to the $850 checks for inflation relief, Maine also approved $450 payments to assist residents in covering their heating expenses. Starting at the end of January 2023, those payments have been made out and will continue to be sent through the end of March.
In 2022, California authorized $1,050 in inflation relief checks; the majority of payments have already been made. The state predicted that around 5% of the checks would not be issued until January 15, 2023 at the time they were announced. The due date has been extended, though, and some payments won’t be made until February 14. Particularly, those payments are for debit card holders whose addresses have changed since they submitted their 2020 tax returns.
Rebate amounts start at $350 and depend on a number of factors, including household size, tax-filing status, and income. Couples making at least $500,000 and individuals making $250,000 or more are not eligible.
Two million residents of New Jersey will get $2 billion in property tax refunds inflation relief. Homeowners earning up to $150,000 are eligible for $1,500 in rebate money, while those making between $150,000 and $250,000 are given $1,000.
As long as their annual income does not exceed $150,000, renters are also eligible for $450. Payments are expected to come by May 2023 at the latest.
In November 2022, South Carolina started sending refund checks for up to $800 to eligible residents. Those who submitted their inflation relief before the deadline of October 17 received their money before the end of 2022, while those who did so before the deadline of February 15 but beyond it will receive their payouts in March 2023.
One of the few states, Idaho, has continued to approve stimulus funding through at least February 2023. The state expects to get its rebates from the 2022 Special Session by the end of March 2023. The refund is equal to $300 for single filers and $600 for joint filers, or 10% of the taxpayer’s 2020 income tax burden, whichever is larger.
About 800,000 payments, amounting to up to $500 million, are expected to be sent, according to the state Tax Commission.