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Tax Return 2023: 22 U.S. States May Not Report Relief Payments On Tax Returns, IRS Says

Income Tax Return 2023 [Photo: Canara HSBC Life Insurance]
Income Tax Return 2023 [Photo: Canara HSBC Life Insurance]

The Internal Revenue Service (IRS) announced that 22 U.S. states may not report relief payments they have received on Tax Return 2023. In this article, read and find out if your state is one of them!

Income Tax Return 2023 [Photo: Kiplinger]

Income Tax Return 2023 [Photo: Kiplinger]

In an update on February 10, the Internal Revenue Service (IRS) announced a new guidance for the tax filers in the states where special relief payments were issued in 2022. The announcement stated that the tax filers in these states do not need to report these payments in the Tax Return 2023. This was after the IRS was still uncertain whether the payments are subject to federal income taxes or the tax filers have to wait before the agency can provide for an updated guidance.

According to Loe, there are 22 of these U.S. states including Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, South Carolina, and Virginia.

READ ALSO: Inflation Relief Payments In Most States Not Taxable, IRS Says

Tax Return 2023 on Federal Level

According to Siegel Bernard, the special relief payments are classified differently in the states mentioned. Some payments are called inflation relief, others are disaster relief, and a few are even advance payments on state tax credits. This is one of the reasons why the IRS had a hard time determining if these payments are taxable or exempt from taxes on the Tax Return 2023.

However, some state governments clarified that the special relief payments may be taxable at the state level, but not at the federal level. For instance, the State Tax Commission of Idaho announced that their tax rebates may not be taxable at the state level, but they may be taxable at the federal level. The same goes for the Taxation and Revenue Department of New Mexico as well.

READ ALSO: Up To $1,050 Inflation Relief Payments— See Which States Receive Them

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