The IRS has offered guidance for residents of the 21 states that made direct payments to help people keep up with rising costs.
During the pandemic, 21 states made direct payments to residents to help them keep up with rising costs. The IRS recently addressed whether people would have to report those payments on their federal income-tax returns.
But there’s a wrinkle for residents of four states: Georgia, Massachusetts, South Carolina and Virginia. The IRS said there might be instances where taxpayers in these states will need to count the money as part of their income on their federal return. At a time when inflation is slowly coming off four-decade highs, anything that helps people hang on to their money is good news. And anything that keeps tax returns as simple as possible is always welcome.
In Virginia, where refunds were up to $250 for eligible individuals and $500 for married couples filing jointly, and in South Carolina, where refunds were up to $800, the money was pegged to 2021 state income-tax liabilities. In Georgia, where refunds were up to $250 for eligible individuals and $500 for married couples filing jointly, the money was linked to 2020 income taxes.
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