Chicago Sun-Times (Sunday)

IRS URGES RECIPIENTS OF SPECIAL STATE REFUNDS TO DELAY FILING TAXES

- BY ADRIANA MORGA

NEW YORK — The Internal Revenue Service is recommendi­ng that taxpayers hold off on filing their tax returns for 2022 if they received a special tax refund or payment from their state last year.

Last year, 19 states, including Illinois, offered diverse programs that offered inflation relief payments or refunds for taxpayers. The 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 for taxpayers,” the IRS said in its statement.

For residents from states such as California and Illinois, the agency is recommendi­ng that they hold off on filing their tax returns until they receive further instructio­n from the IRS.

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

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

If you got a tax refund from your state in 2022, the IRS is recommendi­ng you hold off on filing your tax return until the agency gives further instructio­ns. Certain states that provided these refunds have determined that these payments are not taxable for most people. What needs to be determined is if these refunds are taxable on the federal level, said Tom O’Saben, director of tax content and government relations at the National Associatio­n of Tax Profession­als.

In some states, people would get taxed if they received a tax refund in 2022 only if they itemize their deductions, said Keith Hall, president and CEO of the National Associatio­n for the Self-Employed. An example of a state that is taking this route is Virginia, which has stated that taxpayers that filed a standard deduction will not be taxed for their tax rebate. However, not all states have issued guidance on tax rebates.

Why should I wait to file my return?

Following the IRS recommenda­tions is key if taxpayers want to avoid having to amend a previously filed tax return, said Hall.

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

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

The IRS is recommendi­ng that you don’t file an amended return yet. If you believe 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 multiple states in 2022. The list includes Illinois, Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Maine, Massachuse­tts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina and Virginia.

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

If you are not sure if you need to wait to file your taxes, Hall recommends you consult with a tax profession­al about your specific situation.

 ?? SUSAN WALSH/AP ??
SUSAN WALSH/AP

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