IRS Won't Tax Most Relief Payments Made by States Last Year

IRS Won’t Tax Most Relief Payments Made by States Last Year

February 13, 2023

Courtesy of 401kcalculator.org, Creative Commons license

(BOSTON – AP) – The IRS says most relief checks issued by states last year won’t be subject to federal taxes, providing late guidance as taxpayers have begun filing returns.

The IRS said it won’t challenge the taxability of payments related to general welfare and disaster, meaning taxpayers who received those checks won’t have to pay federal taxes on those direct payments.

Taxpayers in several states do not have to report relief checks. Many taxpayers in Massachusetts also avoid federal taxes on state payments if they meet certain requirements, the IRS said.

“The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation,” the IRS said Friday evening in a statement.

The guidance on Friday came a week after the IRS told payment recipients to delay filing taxes. All told, the IRS said special payments were made by 21 states in 2022.

By DAVID SHARP, THE ASSOCIATED PRESS.

Minor edits by Brian Engles, CapeCod.com NewsCenter.