IRS Says Taxpayers in These States Should Wait to File Taxes This Year - CNET

This story is part of Taxes 2023, CNET's coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.

When it comes to filing your income taxes, sooner is better than later -- usually. This year, however, Americans who received state stimulus checks or tax rebates in 2022 are advised to wait to see whether that money is taxable by the feds. 

On Friday, Feb. 3, the IRS announced that it was working with states to determine whether "special tax refunds or payments" from last year are taxable. Referring to the complexity of the rules around these state programs, the agency said that taxpayers who received state rebate checks in 2022 should "wait until additional guidance is available or consult with a reputable tax professional."

Learn more about the taxability of state refunds and payments from 2022 and what to do if you've already filed your tax return. For more tax tips, find out if you have to pay taxes on Social Security benefits and how to file your taxes on a phone or tablet.

Which states sent tax rebates or payments in 2022?

There were no federal stimulus checks in 2022, but at least 20 states gave money back to their residents in the form of income tax rebates, property tax rebates, gas rebates, child rebates or direct relief payments for low-income families or frontline health care workers.

If you live in one of these 20 states, you may have received money from your state in 2022:

Alaska, which provides a "Permanent Fund Dividend" to its residents every year, gave out the most money in 2022 -- $3,124 to each adult and child. On its dedicated website, the state says that the $3,124 payment from 2022 is subject to federal income taxes. 

Massachusetts' 62F taxpayer refund was also triggered by a surplus of state tax revenue, and the state says that the money could be taxable federally, depending on whether or not you itemized deductions in 2021.

The rest of the state tax rebates and relief payments were one-time checks with differing levels of eligibility and means testing. Most of the state websites take care to explain that payments from 2022 are not subject to state taxes but could be taxable federally. 

Hawaii -- which gave a "constitutional refund" of $100 to $300 to residents who filed taxes in 2021 -- goes a step further on its website to say that its payments are not subject to federal income tax because the refund was "not received as result of a deduction claimed for state taxes paid."

Although both Alaska and Hawaii seem certain about the taxability of their state payments, we would recommend waiting for an official announcement from the IRS before filing your taxes this year.

When will the IRS decide whether state tax rebates are taxable?

In its announcement on Feb. 3, the IRS said that it expects to "provide additional clarity for as many states and taxpayers as possible next week." That means a decision should be coming any day now.

If I already filed my 2022 tax return, do I need to amend it to include state tax rebates?

Not yet. The IRS does not recommend filing an amended return for 2022. The agency's advice for now is to sit tight and wait. 

It doesn't want you to call for more information either. In its Feb. 3 announcement, the agency said that, "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."

For more tax tips, learn how to scan important tax documents with your phone or how to claim homeowner tax breaks.