IRS requests not to file now

[Souschef]

Last year, California and a few other states issued either inflation relief funds or state tax refunds.
The IRS has not yet sorted if these are taxable or not. We received a 1099-MISC for the $700 that we got. Turbotax let me enter on the Federal return, but on the CA state return there was a place to deduct it under adjustments.
Normally, a state tax refund is issued as a 1099-G, not MISC.
Since I probably owe, it is no problem for me to wait for this to be resolved.

 

[badatmath]

Interesting.

I don't have enough information to file yet anyway which is moderately annoying. 99% sure I won't owe but would be nice to be certain.

 

[Accidental Retiree]

I got a 1099-MISC from the state, for the $700 Middle Class Tax Refund, which, by the way, we *never* received.

When I entered this 1099 info into Turbo Tax Federal Income, the software told me the $700 is not taxable by feds or state.

 

[MichaelB]

Here’s the IRS statement https://www.irs.gov/newsroom/irs-statement-taxability-of-state-payments

Feb. 3, 2023

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. There are a variety of state programs that distributed these payments in 2022 and the rules surrounding them are complex. We expect to provide additional clarity for as many states and taxpayers as possible next week.

For taxpayers uncertain about the taxability of their state payments, the IRS recommends they wait until additional guidance is available or consult with a reputable tax professional. 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. We also do not recommend amending a previously filed 2022 return.

 

[niven]

You'd think the IRS statement could have been clearer. Unless you itemized deductions on your Federal return, it shouldn't be taxable.

 

[Jimonlimon]

Note that many of us didn't receive our payment until after January 1, so it would apply to 2023 not 2022 taxes.

It looks like they attempted to structure this as a "refund" with the hopes that since many/most aren't able to deduct state taxes in the first place, any refunds shouldn't be taxable. We'll see what the Feds say.

I got a 1099-MISC from the state, for the $700 Middle Class Tax Refund, which, by the way, we *never* received.
.

If you're in California, the Franchise Tax Board has a website with instructions in case you never got the deposit or debit card: https://www.ftb.ca.gov/about-ftb/newsroom/middle-class-tax-refund/help.html

 

[Sunset]

It affects quite a few States, including IL.
We don't have all our forms so no impact right now.
Worst is I'm not sure what $$ they are talking about... so don't know if we actually got any or not.
If we don't get a form, does that mean the form was lost or we didn't get any

 

[djsander]

I think the problem with the feds is with how states are calling it. Some call it stimulus or inflation relief, some call it a refundable tax rebate and I’m sure others call it a refundable tax credit or even something else. The IRS is probably going through the 75000+ pages of tax code to determine how it is to be categorized depending on how the state categorizes it. We received it for New Mexico and they said it’s a refundable tax rebate and no state taxes are due, but can’t comment on federal taxes. Have not received any sort of 1099 from the state.

 

[Accidental Retiree]

Note that many of us didn't receive our payment until after January 1, so it would apply to 2023 not 2022 taxes.

It looks like they attempted to structure this as a "refund" with the hopes that since many/most aren't able to deduct state taxes in the first place, any refunds shouldn't be taxable. We'll see what the Feds say.




If you're in California, the Franchise Tax Board has a website with instructions in case you never got the deposit or debit card: https://www.ftb.ca.gov/about-ftb/newsroom/middle-class-tax-refund/help.html

Yes, we’ve spent a lot of time on phone calls down phone trees to dead ends where our call got abruptly ended each time.

I finally created an FTB account and emailed them about non-receipt; they hope to get back to me in 30 days.

 

[TrvlBug]

Was wondering what to do about this. Supposedly CA is generating 1099s for those receiving $600 or more. We received a $500 Middle Class Tax Refund earlier this month, so won't have to worry about it until next year. Yes, hell froze over in CA...we never, ever qualify for any type of refund/rebate/stimulus/etc. . The exception being energy tax credits.

 

[Morgan22]

Last year, California and a few other states issued either inflation relief funds or state tax refunds.
The IRS has not yet sorted if these are taxable or not. We received a 1099-MISC for the $700 that we got. Turbotax let me enter on the Federal return, but on the CA state return there was a place to deduct it under adjustments.
Normally, a state tax refund is issued as a 1099-G, not MISC.
Since I probably owe, it is no problem for me to wait for this to be resolved.

Oops, I already completed/transmitted my returns via Turbo Tax on Saturday night.

Regarding no where to enter the 1099-Misc:

I entered the CA MCTR into the 1099-Misc field of Turbo Tax. Turbo Tax then specifically asked if my 1099-Misc was related to the CA MCTR. When I clicked on Yes it then told me that it was not taxable by the state or feds. The tax forms show an attachment that shows a positive and negative amount for Schedule 1: Additional Income and Adjustments to Income
Other Income

Turbo Tax also produced the same type of Schedule for CA that shows a positive and a matching negative amount: Schedule CA (540): California Adjustments
Line 8z - Other Income

Schedule 1 line 8z shows $0. But it does say "See Stmt".

 

[Drake3287]

Yep, all bets are that it'll be taxable on your federal return once they make the final determination. Anyone having already filed will have to amend their return assuming they received a 1099.

I sort of feel sorry for those that really needed this money. Now that's it's already spent, these people will have to come up with a $100. or so to pay the taxes due on it.

 

[cathy63]

You'd think the IRS statement could have been clearer. Unless you itemized deductions on your Federal return, it shouldn't be taxable.

It depends what state you're in. Different states called the payment different things, so each one has to be looked at individually.

California called the payment a "middle class tax refund", but the law that authorized it specifically says it is "not a refund of income tax". That's why it's reported on a 1099-MISC instead of a 1099-G, and why the IRS has to figure out whether or not it's taxable.

TurboTax's staff experts have decided to treat the CA payment as non-taxable. They create an entry for the 1099-MISC and then they immediately create a negative entry for the same amount on line 8z of the 1040 to zero it out.

I don't understand why the IRS waited so long to make these rulings. It's not like they didn't know these payments were coming out.

 

[niven]

It depends what state you're in. Different states called the payment different things, so each one has to be looked at individually.

California called the payment a "middle class tax refund", but the law that authorized it specifically says it is "not a refund of income tax". That's why it's reported on a 1099-MISC instead of a 1099-G, and why the IRS has to figure out whether or not it's taxable.

TurboTax's staff experts have decided to treat the CA payment as non-taxable. They create an entry for the 1099-MISC and then they immediately create a negative entry for the same amount on line 8z of the 1040 to zero it out.

I don't understand why the IRS waited so long to make these rulings. It's not like they didn't know these payments were coming out.

Well, that's why I said shouldn't be taxable, not isn't.

Virginia called it a one-time tax rebate and only sent it out to taxpayers who had a tax liability in the prior year.

Anyway, joke's on the IRS - my taxable income was low enough in 2022 that including the state tax rebate wouldn't change my taxes by even a dollar.

 

[foxcreek9]

It affects quite a few States, including IL.
We don't have all our forms so no impact right now.
Worst is I'm not sure what $$ they are talking about... so don't know if we actually got any or not.
If we don't get a form, does that mean the form was lost or we didn't get any

If you paid RE taxes you should have received a check for $50 per person plus $300 RE tax refund last september. It was [-]a vote buying[/-], sorry, inflation fighting rebate.

 

[Montecfo]

Shouldn't be taxable if you did not itemize OR if you were capped out on state tax deductions by an amount which exceeds the refund.

 

[joesxm3]

I am confused about this and hope it does not apply to me.

Is this a check or payment deposit from the state itself? And not talking about the covid relief that came from the federal government?

 

[Irishgirlyc58]

I guess I’m glad that I didn’t get my whatever it’s called until January this year.
I hope that the IRS realizes that some payments happened in 2023.

 

[Sunset]

If you paid RE taxes you should have received a check for $50 per person plus $300 RE tax refund last september. It was [-]a vote buying[/-], sorry, inflation fighting rebate.

Thanks.. !

We did get that one (if that's the one they are talking about ? ).

 

[marko]

Similar issue in Massachusetts. We all got a tax rebate due to an old law that said if the state had an x% surplus, it had to be returned to the taxpayers. We received about $2500 in December. It was just a check...no 1099 or anything.

IRS has asked that we hold off submitting our taxes until they figure it out.

 

[Freedom56]

We received a debit card loaded with $400 for both of us last week as part of the California Middle Class Tax Refund program. I would have preferred an Amazon gift card. So far we have not received any 1099-MISC for that payment for 2022. Technically, since we did not receive it in 2022 we should not be liable for taxes in 2022 for that payment. The IRS is telling people who received this payment to delay filing their returns.

https://www.cbsnews.com/news/irs-wa...delay-filing-tax-returns-in-22-states-rebate/

 

[RobbieB]

Got mine a couple weeks ago, so 2023 for me. They ought to have it figured out by then eh?

 

[cathy63]

I am confused about this and hope it does not apply to me.

Is this a check or payment deposit from the state itself? And not talking about the covid relief that came from the federal government?

Nineteen states sent money to some of their residents in 2022. All of the state stimulus programs are different and probably some of them will be taxable on Federal returns and some will not. We are all waiting for the IRS to tell us the answer, because apparently, despite massive amounts of publicity in many states, they only just learned of the existence of these programs a couple of weeks ago.

The affected states are Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina and Virginia. If you live in one of these states, and did not get a payment, you might want to do some Googling and find out if you were eligible and how to claim your payment.

 

[joesxm3]

Cathy

Thank you for the list.

 

[marko]

Nineteen states sent money to some of their residents in 2022. All of the state stimulus programs are different and probably some of them will be taxable on Federal returns and some will not. We are all waiting for the IRS to tell us the answer, because apparently, despite massive amounts of publicity in many states, they only just learned of the existence of these programs a couple of weeks ago.

The affected states are Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina and Virginia. If you live in one of these states, and did not get a payment, you might want to do some Googling and find out if you were eligible and how to claim your payment.

Good list. Note that Massachusetts payments (at least the payment I received) were not stimulus but return of taxes paid due to a surplus of cash as required by law. But the same problem remains.