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To help during the COVID-19 pandemic, the federal government and some states offered various payments to residents. In this article, read and find out if these payments are considered as taxable income.
![Tax Return with Stimulus Payment [Photo: Forbes]](https://s3.us-west-1.amazonaws.com/southarkansassun.com/2023/02/yougov-survey-majority-americans-dont-know-stimulus-checks-wont-be-taxed.jpg)
Tax Return with Stimulus Payment [Photo: Forbes]
READ ALSO: Critical Relief: State-Led Stimulus Efforts Keep Americans Afloat
Federal Stimulus Payments
An article on NASFAA says that the federal stimulus payments were issued in 2020 and 2021 to help combat the negative effects of the COVID-19 pandemic. If a payment has not been received until 2022, theoretically, it could affect the tax return filed in 2023. This is because in most cases, income is taxable in the year it was received regardless if it was supposed to be issued a year before.
Fortunately, taxation is not an issue for those federal stimulus payments that are received late. This is because the Internal Revenue Service (IRS) has considered any payments from the American Rescue Plan Act of 2021, the 2021 Coronavirus Response and Relief Supplemental Appropriations Act, and the Coronavirus Aid, Relief, and Economic Security Act as not taxable.
State Relief Payments
According to Csiszar, the taxation regarding state relief payments on a state level is vaguer compared to federal stimulus payments. In general, state relief payments at the federal level are not taxable because they are considered as welfare payments.
However, in some cases, it is possible that federal taxes may be owed on those payments. For instance, with California’s Middle Class Tax Refund program, the Franchise Tax Board states that residents do not need to claim the payments as income on their income tax returns. However, it is also stated that they may be considered federal income and may be taxable. This is because California has stated that Form 1099s will be issued to residents and the IRS for any payments of $600 or more.
READ ALSO: America Demands Relief: Majority Calls For More Stimulus Checks Despite Economic Uncertainty
