The direct payments that a number of states authorized for residents last year, while inflation raged, are presenting new questions this tax season: Will that money be taxed by the feds? The answers matter to the Internal Revenue Service, state tax authorities and tax preparers after approximately 20 states green lit the payments last year.
Most importantly, the answers matter to Americans who are hoping to hold onto every penny while inflation rates stay uncomfortably warm even after if it has finally come off last year’s boil. The list of states with 2022 rebates included Arkansas, California, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, New York, Oregon, South Carolina and Virginia, by Auxier’s count. Three states issued 2021 direct payments, California, Idaho and Maryland, Auxier said. The IRS “is aware of questions involving special tax refunds or payments made by states in 2022; we are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers,” the federal tax collector said in a statement on Friday.
“The list of states with 202 …