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IRS urges millions of taxpayers to delay filing

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(NEXSTAR) – The Internal Revenue Service is telling millions of taxpayers who received special state tax refunds or payments to delay filing their 2022 taxes.

“There are a variety of state programs that distributed these payments in 2022 and the rules surrounding them are complex,” the IRS said in a statement. “We expect to provide additional clarity for as many states and taxpayers as possible next week.”

The IRS said it is “aware of questions” surrounding the relief efforts that were crafted by states in different ways and under different rules.

When can you expect your tax refund?

In California, for instance, residents who met the income, filing status and dependent requirements received checks ranging from $200 to $1,050 as part of the Middle Class Tax Refund (MCTR).

A spokesperson for the Franchise Tax Board (FTB) told Nexstar that as far as California state taxes are concerned, the MCTR is not taxable income, but noted that it “may be considered federal income,” leaving taxpayers in limbo and without official guidance from the IRS. According to the FTB, the refunds have benefitted more than 31 million California taxpayers and their dependents.

The IRS now says they are still evaluating whether the tax refunds like California’s Middle Class Tax Refunds are taxable for Federal income tax purposes.  

“While this is unusual, this kind of determination in the middle of tax season isn’t unprecedented,” Tax Attorney Adam Brewer of AB Tax Law told Nexstar. “In 2021, the IRS exempted the first $10,200 of unemployment benefits received in 2020 after many taxpayers had already filed their income taxes and reported the income as taxable.  This mid-tax season rule change may be following that precedent.”

These pandemic tax benefits have dried up for parents

In Illinois, qualifying residents received one-time payments of up to $700 under the Illinois Family Relief Plan. Making matters more complicated, the checks consisted of two different rebates: one for individual income tax and another for property tax.

“For taxpayers uncertain about the taxability of their state payments, the IRS recommends they wait until additional guidance is available or consult with a reputable tax professional,” the IRS advised.

Why you owe taxes this year: Experts explain key changes

The two states are among 19 total that issued some type of special rebate or payment in 2022, according to the Associated Press. The full list consists of Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, and Virginia.

“While this is unusual, this kind of determination in the middle of tax season isn’t unprecedented,” Adam Brewer, a tax attorney with AB Tax Law in San Diego, tells Nexstar. “In 2021, the IRS exempted the first $10,200 of unemployment benefits received in 2020 after many Taxpayers had already filed their income taxes and reported the income as taxable. This mid-tax season rule change may be following that precedent.”

“We expect to provide additional clarity for as many states and taxpayers as possible next week,” the IRS said in the statement, adding that the agency doesn’t recommend trying to call the IRS or amending a previously filed 2022 return before guidance is issued.

Addy Bink contributed to this report.

U.S.

Copyright 2024 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed

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