NEW YORK — The IRS advises taxpayers to wait to file their tax returns for 2022 if they received a refund or special tax payment from their state last year.
Last year, 19 states – including New York, California, Florida and Illinois – offered various programs that offered inflation relief payments or taxpayer refunds. He IRS issued the guidance Friday due to the agency’s uncertainty about the taxability of the payments.
“We are working with state tax officials as quickly as possible to provide additional information and clarity to taxpayers,” the IRS said in its statement.
For residents of these states, the agency recommends that they postpone filing their tax returns until they receive further instructions from the IRS.
If you received a state tax refund last year, here’s what you need to know:
WHAT STATES OFFERED EXCISE TAX REFUNDS IN 2022?
A total of 19 states offered excise tax rebates in 2022. The list includes Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, and Virginia.
I RECEIVED A TAX REFUND FROM MY STATE, WHAT DOES THE IRS NOTICE MEAN TO ME?
If you received a tax refund from your state in 2022, the IRS recommends that you postpone filing your tax return until further instructions from the agency.
Certain states that provided these refunds have determined that these payments are not taxable for most people. What needs to be determined is whether these refunds are taxable at the federal level, said Tom O’Saben, director of tax content and government relations for the National Association of Tax Professionals.
In some states, people would pay taxes if they received a tax refund in 2022 only if they itemized their deductions, said Keith Hall, president and CEO of the National Association of the Self-Employed.
An example of a state that is going this route is Virginia, which has declared that taxpayers who filed a standard deduction will not pay taxes on their tax refund. However, not all states have issued guidance on tax refunds.
WHY DO I HAVE TO WAIT TO FILE MY RETURN?
Following IRS recommendations is key if taxpayers want to avoid having to amend a previously filed tax return, Hall said.
“I think the IRS is trying to help people save another return, if they had to file an amended return,” he said.
I RECEIVED A REFUND AND I ALREADY FILE MY TAXES, WHAT DO I DO?
The IRS recommends that you do not file an amended return yet.
If you think you need to file an amended return, the IRS advises you to wait until further instructions are given.
WHAT IF I AM NOT SURE IF THIS APPLIES TO ME?
If you’re not sure if you need to wait to file your taxes, Hall recommends consulting with a tax professional about your specific situation.