When tax filing season opened earlier this year, the IRS asked millions of Americans not to file their returns. The agency had not determined how it should handle the billions of dollars in state stimulus funds that 21 states have distributed to residents throughout 2022.
But anyone who took a break from filing their taxes to wait for the IRS’ decision can be doubly happy. THE The IRS is ready to receive your tax returnand your state stimulus money is probably not taxable.
We are in partnership with Spruce℠, a new mobile banking service from H&R Block, to help you understand what you need to know about filing your taxes with your state stimulus payment. If you are looking for a better banking option, Spruce might be a good choice for you. Spruce℠ is a mobile bank for people who want to be good with money. And a $50 bonus for qualifying direct deposits is a great place to start. Check Out Spruce Here >>
Here’s what you need to know about this decision before you file your tax return.
Which government stimulus checks are not taxable?
The IRS’ late guidance affected taxpayers in 21 states. Fortunately, the IRS determined that most state stimulus checks were for general welfare or disaster relief. According to the IRS, this type of payment is not taxable.
If you received payment from the following states, you can file today:
If you received one of the above payouts, you can deposit as usual. Neither your tax filing process nor your refund will change due to the payment.
If your tax software may ask you about these extra payments, you don’t have to worry. The software will use the information you provide to determine your tax returns. Your federal return will not be affected because the IRS has officially determined that it does not need to know about your state relief payments.
Which stimulus checks are probably not taxable?
If you live in Georgia, Massachusetts, Caroline from the southAnd Virginia, taxing your relief checks is a bit murkier. Most people won’t have to pay taxes on the money they received from these states, but some will.
In these four states, you will not owe taxes unless you have itemized your taxes in 2021 and received a federal tax benefit by claiming the state and local tax deduction. People who meet both conditions will have to declare part of the income they received from the state.
You can expect to receive tax form 1099-G from your state, but figuring out how much you need to declare isn’t straightforward unless you’re the kind of person who’s willing to read the 1040 deposit instructions.
Instead of doing the math on your own, consider getting help from tax software or an accountant. Software or an accountant can determine the exact amount of income to report. If you plan to use tax software, use the same tax software as last year. Most companies keep your tax return for several years, and using the same software will make it easier to file this year.
What if I haven’t received my state incentive check?
If you were eligible to receive a stimulus payment from the state but did not receive a check, you may still be able to get funds from your state. Use the links above for instructions on how you can claim the money owed to you. Many states will allow you to claim these funds through 2023, but you may need to file taxes starting in 2021 or 2022 to receive payment.
Are you satisfied with your bank for your tax refund?
With all that talk of tax refunds on your mind, you should also ask yourself if you’re happy with your bank – where you’re likely depositing your tax refund. If you pay monthly fees or need to make sure you get enough direct deposits to avoid fees, maybe it’s time for a switch?
This is where Spruce℠ comes in. Spruce℠ is a new mobile banking platform for people who want to be good with money. It’s built by H&R Block and offers everything you expect from a mobile bank – with no monthly maintenance fees! Right now, you can earn a $50 bonus when you sign up and have qualified direct deposits. Check Out Spruce Here >>