Take a fresh look at your lifestyle.

State Stimulus Checks Aren’t Taxable Income

0

[ad_1]

When tax filing season opened up earlier this year, the IRS asked millions of Americans to hold off on filing their returns. The agency hadn’t determined how it should treat the billions of dollars of state stimulus funding that 21 states distributed to residents throughout 2022. 

But anyone who paused on tax filing to await the IRS’s decision can doubly rejoice. The IRS is ready to take your tax return, and your state stimulus money is probably not taxable. 

We’re partnering 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’re looking for a better banking option, Spruce might be a good choice for you. Spruce℠ is mobile banking for people who want to be good with money. And a $50 bonus for qualified 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 taxes.

Which State Stimulus Checks Aren’t Taxable?

The delayed guidance from the IRS affected taxpayers in 21 states. Thankfully, the IRS determined that most of the state stimulus checks were for General Welfare or Disaster Relief. According to the IRS, this type of payment isn’t taxable. 

If you received a payment from the following states, you can file today:

If you received any of the above payments, you can file 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 supplemental payments, you don’t need to worry. The software will use the information you provide to figure out your state tax returns. Your Federal return won’t be affected because the IRS has officially determined that it doesn’t need to know about your state relief payments.

Which Stimulus Checks Are Probably Not Taxable?

If you live in Georgia, Massachusetts, South Carolina, and Virginia, the taxability of your relief checks is a bit murkier. Most people will not 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 itemized your taxes in 2021 and you received a Federal tax benefit from claiming the state and local tax deduction. Folks who meet both conditions will need to declare a portion 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 type of person who is willing to read the 1040 filing instructions.

Instead of doing the math on your own, consider enlisting help from tax software or an accountant. Either software or an accountant can figure out the right amount of income that needs to be declared. If you plan to use tax software, prioritize using the same tax software as last year. Most companies save your tax return for several years, and using the same software will make filing easier this year.

What If I Didn’t Get My State Stimulus Check?

If you were eligible to receive a state stimulus payment but didn’t receive a check, you may still be able to get funds from your state. Use the links above to get directions on how you can claim the money you’re owed. Many states will allow you to claim these funds into 2023, but you may have to file taxes from 2021 or 2022 to receive a payment.

Are You Happy With Your Bank For Your Tax Refund?

With all of this talk of tax refunds on your mind, you also should ask yourself if you’re happy with your bank – where you’re likely depositing your tax refund. If you’re paying monthly fees, or having to ensure you get enough direct deposits to avoid fees – maybe it’s time to switch?

That’s 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’d 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 >>

[ad_2]

Source link

Leave A Reply

Your email address will not be published.