During 2022, various states used pandemic monies from the federal
government to issue tax payments. They called them, variously, rebates
and refunds.

Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New
Mexico, Oregon, Rhode Island, South Carolina, and Virginia

Each state is handling it differently. In Virginia, it's reportable and
taxable if the taxpayer itemizes but it's not reportable if the
taxpayer takes the standard deduction.

In my state, Illinois, it's not taxable. There were two rebates, one for
income taxes and another for property taxes (to the property owner if
the primary residence).

At the federal level, are these treated the same way as tax refunds,
that is, reportable by taxpayers who took an itemized deduction for
state taxes paid during the previous year?

Are they reportable as income in some other way?

As the payments may not be the same type of income from one state to the
next, will IRS guidance be different from one state to the next?

Not only has IRS yet to issue guidance, they've requested that affected taxpayers wait to file till guidance is issued.

IRS urges special refund recipients to delay filing taxes
By ADRIANA MORGA
AP
2/7/2023 https://apnews.com/article/illinois-state-government-california-virginia-internal-revenue-service-f505d4e2ebac314fdc21fd5b16815998

IRS Statement - Taxability of State Payments
2/3/2023 https://www.irs.gov/newsroom/irs-statement-taxability-of-state-payments

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On Wednesday, February 8, 2023 at 1:33:38 PM UTC-5, Adam H. Kerman wrote:

During 2022, various states used pandemic monies from the federal
government to issue tax payments. They called them, variously, rebates
and refunds.

Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New
Mexico, Oregon, Rhode Island, South Carolina, and Virginia

Each state is handling it differently. In Virginia, it's reportable and taxable if the taxpayer itemizes but it's not reportable if the
taxpayer takes the standard deduction.

In my state, Illinois, it's not taxable. There were two rebates, one for income taxes and another for property taxes (to the property owner if
the primary residence).

At the federal level, are these treated the same way as tax refunds,
that is, reportable by taxpayers who took an itemized deduction for
state taxes paid during the previous year?

Are they reportable as income in some other way?

As the payments may not be the same type of income from one state to the next, will IRS guidance be different from one state to the next?

Not only has IRS yet to issue guidance, they've requested that affected taxpayers wait to file till guidance is issued.

IRS urges special refund recipients to delay filing taxes
By ADRIANA MORGA
AP
2/7/2023 https://apnews.com/article/illinois-state-government-california-virginia-internal-revenue-service-f505d4e2ebac314fdc21fd5b16815998

IRS Statement - Taxability of State Payments
2/3/2023 https://www.irs.gov/newsroom/irs-statement-taxability-of-state-payments

--

No one can answer your questions definitively before the IRS issues its guidance. I have seen elsewhere that some practitioners are choosing a position and disclosing it via Form 8275 if they think disclosure is necessary. The big chains have also taken
a position in advance of IRS guidance, but I don't know what that position is, or whether it is consistent across the country.

I have no problem asking my clients to wait for guidance, but then I don't have a storefront retail practice and most of my clients won't have their documents to me until next month (or later). Obviously, those with storefront practices or simpler
returns where the clients are dependent on a quick refund for everyday living expenses must make their decision now.

Ira Smilovitz, EA
Leonia, NJ

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I trust most here saw the following from the IRS yesterday:

"The Internal Revenue Service will not collect federal taxes against state-issued inflation relief payments or tax refunds, the agency said Friday, a reprieve for tens of millions of taxpayers who received the subsidies."

See https://www.washingtonpost.com/business/2023/02/10/irs-taxes-state-inflation/

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
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[email protected] <[email protected]> wrote:

I trust most here saw the following from the IRS yesterday:

"The Internal Revenue Service will not collect federal taxes against >state-issued inflation relief payments or tax refunds, the agency said >Friday, a reprieve for tens of millions of taxpayers who received the >subsidies."

See >https://www.washingtonpost.com/business/2023/02/10/irs-taxes-state-inflation/

Actually, I hadn't looked for it. Thanks

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

Note that Georgia, Massachusetts, South Carolina, and Virginia issued
tax refunds. The payment is not included in income for federal tax
purposes if

1) taxpayer didn't itemize, or

2) taxpayer did itemize but didn't receive a benefit in the year of
deduction.

I guess that means deductions exceeded tax liability.

There's a handy chart listing payments from 17 other states. https://www.irs.gov/newsroom/state-payments

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
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On Sat, 11 Feb 2023 15:39:07 EST, Adam H. Kerman wrote:

[email protected] <[email protected]> wrote:

I trust most here saw the following from the IRS yesterday:

"The Internal Revenue Service will not collect federal taxes against >state-issued inflation relief payments or tax refunds, the agency said >Friday, a reprieve for tens of millions of taxpayers who received the >subsidies."

See >https://www.washingtonpost.com/business/2023/02/10/irs-taxes-state-inflation/

Actually, I hadn't looked for it. Thanks

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

That page from the IRS repeat "2022" a zillion times. Some of the
payments from the FTB in California were issued in 2023 - mine among
them, naturally. Am I safe to assume, since this was part of the same
program that the IRS has now ""blessed", albeit issued late, that I
will exclude it from my 2023 return?

--
Stan Brown, Tehachapi, California, USA https://BrownMath.com/
Shikata ga nai...

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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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Stan Brown <[email protected]> wrote:

On Sat, 11 Feb 2023 15:39:07 EST, Adam H. Kerman wrote:

[email protected] <[email protected]> wrote:

I trust most here saw the following from the IRS yesterday:

"The Internal Revenue Service will not collect federal taxes against >>>state-issued inflation relief payments or tax refunds, the agency said >>>Friday, a reprieve for tens of millions of taxpayers who received the >>>subsidies."

See >>>https://www.washingtonpost.com/business/2023/02/10/irs-taxes-state-inflation/

Actually, I hadn't looked for it. Thanks

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

That page from the IRS repeat "2022" a zillion times. Some of the
payments from the FTB in California were issued in 2023 - mine among
them, naturally. Am I safe to assume, since this was part of the same
program that the IRS has now ""blessed", albeit issued late, that I
will exclude it from my 2023 return?

If you patiently wait till 2025, you'll get your guidance.

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>

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