Several governments stepped up to provide citizens with additional Stimulus checks in their wallets last year to counteract growing prices. Today, even the IRS is unsure if those checks may result in an unexpected tax burden.
The agency said it was “aware of issues surrounding special tax refunds or Stimulus Checks made by states in 2022” in a statement on February 3. It added that it was “working with state tax officials as swiftly as possible to offer further information and clarity for taxpayers.”
The filers who got cheques should put off filing their federal returns in the interim. The IRS advised waiting until there is more clarification for those who are unsure if their state payments would be taxed.
What To Do If You Missed Your Stimulus Check
The IRS stated in its statement that the best course of action for taxpayers and tax preparers with Stimulus Check queries is to wait for more information on state payments rather than phoning the IRS. It also advises against filing a corrected return for 2022. The burden of determining whether checks are taxable will fall primarily on Californians. According to official estimates, nearly 31 million taxpayers and dependents received the $350 to $1,050 Middle-Class Tax Refund.
Over 9.5 million debit cards were provided by the state, and slightly under 7.2 million direct deposits were made; combined, these numbers equal approximately 16 million payments in California alone that could be impacted by the new IRS guidance. The receipt of 1099-MISC tax reporting forms, which are generally used to report income from items like royalties or awards, by Californians who received more than $600, according to the Wall Street Journal, caused some uncertainty. According to the Journal, H&R Block and TurboTax continue to file taxes for people who got the payouts despite IRS advice to the contrary, believing that the state checks are not taxable.
