News from the I.R.S.

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According to the New York Times, the I.R.S. is saying to hold off on filing your federal income tax return if you are a person that received a one-time special payment from your state last year. Since there are a variety of state programs that distributed these payments in 2022 with complex rules, there is some confusion about whether the payments are taxable.

Questions:

  1. According to a list compiled by the Tax Foundation, taxpayers in how many states will probably be affected?
  2. If you use Turbo Tax, what is that company saying?
  3. Why is there so much frustration about the taxability of these special payments?
  4. Are disaster relief payments taxable? 

Source:

Bernard, T.S. (2023) I.R.S. Tells Millions Who Received State Rebates: Don’t File Just Yet. The New York Times, Feb. 9 (Retrievable online at https://www.nytimes.com/2023/02/09/your-money/irs-state-tax-rebates.html)