If You Got State Tax Rebates or Checks in 2022, IRS Has Great News for You!

Joyful multiracial couple holding lot of dollar banknotes, rejoicing success together, posing over yellow background, empty space

Last week, the IRS advised Americans who were granted tax rebates or state stimulus checks in 2022 to wait before filing their taxes. The IRS was still deciding whether these payments were subject to federal income tax.

Their statement referred to the complex rules about state programs and advised taxpayers to wait until further guidance is available or consult a reputable tax professional for more advice.

The IRS has now decided, and it’s some welcome news for taxpayers.

Great News for Taxpayers Who Received State Tax Rebates or Checks

On February 10, 2023, The Internal Revenue Service clarified the situation further.

The IRS has determined that “in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns.”

During a review, the IRS determined it would not expect payments related to the general welfare and disaster relief to be taxable. They also do not expect payments refunding state taxes to be taxable under certain conditions.

Popular Article: Trump Attacks Biden With ‘Real State Of The Union’ Video – All The Highlights

#1 General Welfare and Disaster Relief Payments

As per the IRS statement, “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 IRS has recognized that it can be challenging to determine whether a payment qualifies as exempt from federal income tax. To make it easier for taxpayers, the IRS has stated that if a person does not report a payment from 2022 as part of their income on their federal tax return, the IRS will “not challenge the exclusion of that payment on the original or any amended returns.”

In simple terms, if you forget to include these payments as income, no big deal for 2022 tax returns.

Payments from the following states fall in this category:

  • Alaska – As per the IRS website, the exemption only applies to the supplemental Energy Relief Payment and the annual Permanent Fund Dividend.
  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Hawaii
  • Idaho
  • Illinois – As per the IRS website, two payments were issued. You should treat one as “Refund of Taxes” and the second as a “Welfare/Disaster Relief” payment.
  • Indiana
  • Maine
  • New Jersey
  • New Mexico
  • New York – As per the IRS website, two payments were issued. You should treat one as “Refund of Taxes” and the second as a “Welfare/Disaster Relief” payment.
  • Oregon
  • Pennsylvania
  • Rhode Island

Popular Article: Trump Missed Several Chinese Spy Balloons, Says Biden Administration

#2 Refund of State Taxes Paid

The IRS also stated that “If the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit (for example, because the $10,000 tax deduction limit applied),” you do not need to include this payment as income for federal tax purposes.”

The following states made payments in 2022 that may be excluded from income for federal tax purposes unless the recipient received a tax advantage from the taxes they paid in the same year.

  • Georgia
  • Massachusetts
  • South Carolina
  • Virginia

No Federal Level Checks Issued

In 2022, there were no stimulus checks at the federal level. Still, residents in at least 20 states received income tax rebates, gas rebates, property tax rebates, child rebates, or direct relief payments for low-income families or frontline healthcare workers.

Here’s a list of all the state payments issued in 2022 that qualify for the tax exemption.

Featured Image Credit: Milkos /Depositphotos.com

DISCLOSURE: The post may contain affiliate links, which means that I may receive a small commission if you make a purchase using these links. As an Amazon Associate I earn from qualifying purchases. You can read our affiliate disclosure in our privacy policy. This site is not intending to provide financial advice. This is for entertainment only.

Ash & Pri

Ash & Pri are the Founders of AshandPri.com and have spent the last decade building their way towards financial freedom and a lifetime of memories. Having successfully achieved their early retirement goal in under 10 years, they look forward to sharing their financial sense with like-minded people. Read more about Ash & Pri in the 'About Us' section.