During 2022, various states used pandemic monies from the federal government to issue tax payments. They called them, variously, rebates and refunds.
Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, South Carolina, and Virginia
Each state is handling it differently. In Virginia, it's reportable and taxable if the taxpayer itemizes but it's not reportable if the taxpayer takes the standard deduction.
In my state, Illinois, it's not taxable. There were two rebates, one for income taxes and another for property taxes (to the property owner if the primary residence).
At the federal level, are these treated the same way as tax refunds, that is, reportable by taxpayers who took an itemized deduction for state taxes paid during the previous year?
Are they reportable as income in some other way?
As the payments may not be the same type of income from one state to the next, will IRS guidance be different from one state to the next?
Not only has IRS yet to issue guidance, they've requested that affected taxpayers wait to file till guidance is issued.
IRS urges special refund recipients to delay filing taxes By ADRIANA MORGA AP
2/7/2023
2/3/2023