The IRS announced Friday that most relief checks issued by states last year aren’t subject to federal taxes, providing 11th hour guidance as tax returns start to pour in.
FILE - President Donald Trump's name is seen on a stimulus check issued by the IRS to help combat the adverse economic effects of the COVID-19 outbreak, on April 23, 2020, in San Antonio.
“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. In addition, many taxpayers in Georgia, Massachusetts, South Carolina and Virginia also avoid federal taxes on state payments if they meet certain requirements, the IRS said.
A key question was whether the federal government would count those payments as income and require Californians to pay taxes on it. Many California taxpayers had delayed filing their 2022 returns while waiting for an answer. Friday, the IRS said it would not tax the refund.
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