IRS tells millions it doesn’t want money just yet

IRS tells millions it doesn’t want money just yet

The Internal Revenue Service recommends that taxpayers suspend file their tax returns for 2022 if they received a refund or special tax payment from their state last year.

Last year, 19 states offered various programs offering inflation relief payments or refunds to taxpayers. The IRS released the guidelines on Friday due to the agency’s uncertainty about whether the payments would be taxed.

“We are working with state tax authorities as quickly as possible to provide additional information and clarification to taxpayers,” the official said. The IRS said in its statement.

For residents of states such as California and Illinois, the agency recommends that they not file their taxes until they receive further instructions from the IRS.

If you received a state tax refund last year, here’s what you need to know.

I got a tax refund from my state. What does the IRS statement mean to me?

If you got a tax refund from your state in 2022, the IRS recommends that you do not file your tax return until the agency gives further instructions. Some states that have provided these refunds have determined that these payments are not taxable for most people. What needs to be determined is whether these refunds are federally taxable, said Tom O’Saben, director of tax content and government relations at National Association of Tax Professionals.

In some states, people would be taxed 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 Freelancers. An example of a state taking this route is Virginia, which said taxpayers who filed a standard deduction will not be taxed for their tax refund. However, not all states have issued tax refund guidance.

Why should I wait to file my return?

Following IRS recommendations is key if taxpayers want to avoid having to edit an already-filed tax return, Hall said.

“I think the IRS is trying to help people save another filing, if they were to make an amended return,” he said.

I received a refund and have already filed my taxes. What should 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.

Which states offered special tax refunds in 2022?

Special tax refunds were offered by 19 states in 2022. The list includes Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana , Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon and Rhode Island. , South Carolina and Virginia.

What if I’m not sure if this applies to me?

If you’re unsure whether you should wait to file your taxes, Hall recommends consulting a tax professional about your specific situation.

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