CHICOPEE, Mass. (WWLP) – The IRS announced over the weekend that you won’t have to count the one-time rebates you received from the state on your return this year.
Massachusetts exceeded the state’s tax surplus in 2022 which triggered a 1980s-era tax rebate law, returning nearly $3 billion to Massachusetts taxpayers. The IRS confirmed that rebate payments from the state government will be excluded from your income for federal tax purposes with some edge cases, depending on other tax benefits you received.
“On your federal tax return if you took the standard deduction, then it’s not going to affect you,” said Ray Maagero of Liberty Tax. He explained, “If you itemized your deductions, then it may or may not affect you, depending on whether you got a benefit as a deduction for the state taxes… So it’s a little tricky and it’s pretty complicated.”
Ways and Means Committee Ranking Member Richard Neal released the following statement on the Internal Revenue Service’s guidance that certain state rebates would not be subject to federal income tax:
“In the face of global inflation, several states extended a helping hand to residents in need, and I’m relieved IRS recognizes these payments for what they are: relief. Taxpayers can now go ahead with filing, without the confusion or uncertainty of how these payments will be treated. IRS’s new customer service representatives are in place, already bringing wait times down and getting more taxpayers the answers they need. I encourage all to file early and electronically.”
The last day to file a 2022 tax return is Tuesday, April 18.