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The Middle Class Tax Refund will not be taxed and included in the federal income tax based on the new guidance of the Internal Revenue Service.
Middle Class Tax Refund is not taxable. (Photo: CNET)
Middle Class Tax Refund in California
This tax season taxpayers in California are confused if the Middle Class Tax Refund and other relief payments released by other states in 2022 will not be taxed or included in filing federal income tax to the Internal Revenue Service.
In a published article in Los Angeles Times, IRS released new guidance on Friday afternoon to answer the question of taxpayers about the Middle Class Tax Refund. The IRS stated it “determined it will not challenge the taxability of payments related to general welfare and disaster relief.”
This means that millions of taxpayers should not include the Middle Class Tax Refund when they file their federal income tax 2022. The recipients of the relief payment can also ignore the federal 1099-MISC form that the California Franchise Tax Board sent out last month.
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IRS Released a Statement About the Middle Class Tax Refund
IRS said, “If a payment is made for the promotion of the general welfare or as a disaster relief payment, for example related to the outgoing pandemic, it may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment.”
The agency also added, that “if a taxpayer does not include the amount of one of these payments in its 2022 income for federal income tax purposes, the IRS will not challenge the treatment of the 2022 payment as excludable for income on an original or amended return,” according to a report published in KCRA.
Furthermore, aside from the Middle Class Tax Refund, taxpayers who received other special payments from 21 states should read the new guidance from IRS.
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