The IRS has announced some flexible tax filing details with the citizens of the United States of America who are extremely relieved by the news. Since the federal government stopped offering additional stimulus checks to the people, several US states came forward to provide financial aid. Now the IRS is trying to decide whether these relief payments should be taxed or not.
The US CARES Act was approved on 27th March 2020 and within the next 15 days, stimulus checks started being delivered to Americans all over the nation. Although relief payments were provided, the central government did not make any calls on whether to treat these payments as a source of taxable income or not.
IRS Relief For Stimulus Check
After the COVID-19 benefits are exhausted, people demand to know if they should report their stimulus checks as their income while filing taxes for 2022. Since tax season is here, the IRS finally answered the query and confirmed that while the residents of a few US states will be taxed, some others will be exempted from the standard taxation system.
The states whose residents will be taxed on the stimulus check are namely Massachusetts, Virginia, South Carolina, and Georgia. Taxpayers in these states must report their stimulus payments while filing 2022 taxes.
Pros And Cons Of IRS Decision
IRS has listed 16 states whose residents will be exempted from taxation and they are California, Rhode Island, Colorado, Pennsylvania, Connecticut, Oregon, Delaware, New York, Delaware, New Jersey, Florida, New Mexico, Hawaii, Maine, Idaho, Indiana, and Illinois.
The people living in Alaska have been receiving a yearly dividend payment owing to the Permanent Fund. IRS has informed us that the $662 amount of this dividend will be taxed while the remaining will remain untaxed.