Friday, March 31, 2023
HomeMarketHold Off on Filing Your Return, IRS Tells Millions of Taxpayers

Hold Off on Filing Your Return, IRS Tells Millions of Taxpayers

Mandel Ngan/AFP via Getty Images

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The Internal Revenue Service told millions of taxpayers to hold off on filing their returns until it issues guidance on whether several state refund and rebate payments issued last year count as taxable income.

California sent out more than 16 million special Middle Class Tax Refund payments, worth $9 billion, to help counter inflation and high gas prices last year. It is still unclear if those payments should be treated as taxable federal income, as taxpayers are starting to file their 2022 tax returns.

The IRS said in a Friday statement it will provide guidance this week on the tax status of California’s and other states’ payments. Meanwhile, it is advising those who received these payments to await further instructions. 

“For taxpayers and tax preparers with questions, the best course of action is to wait for additional clarification on state payments rather than calling the IRS,” the IRS said.

Despite the IRS statement, H&R Block and Intuit’s TurboTax, two of the biggest tax-preparation companies, have continued to file returns for clients. The firms are taking the position that the California payments aren’t taxable. 

Read the rest of this article in The Wall Street Journal.

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