IRS says many state rebates aren't taxable at the federal level. Some may face filing struggle, tax pros warn

IRS says many state rebates aren't taxable at the federal level. Some may face filing struggle, tax pros warn  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌  VIEW IN BROWSER | SUBSCRIBE WED, FEB 15, 2023 YOUR WEALTH Editor's Note As the April 18 deadline for filing income tax rapidly approaches, many people will complain about how complicated the whole process is. To be sure, doing taxes in the U.S. is notoriously complicated and costly. And it gets even worse when there are delays and backlogs. Of course, the IRS didn't make the process any less confusing when the agency urged millions of taxpayers to hold off filing while it determined if certain funds are taxable on federal returns. The IRS last week did finally issue guidance for those millions of Americans who received state rebates or payments in 2022. To that end, taxpayers in more than a dozen states won't need to report these payments as income (if they meet some requirements) on federal tax returns, as CNBC's Kate Dore has been reporting in several stories on this important topic. During a review process, the IRS determined it will not challenge the taxability of payments related to general welfare and disaster relief. This means that people in the following states do not need to report these state payments on their 2022 tax return: California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. (Alaska is also this group, but there are some nuances that need to be taken in account.) In addition, many taxpayers in Georgia, Massachusetts, South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain requirements. For these individuals, state payments will not be included for federal tax purposes if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit. If this all sounds somewhat confusing to you, I am sure you're not alone. In fact, some tax professionals told CNBC personal finance reporter Dore that they fully expect many taxpayers to face some filing challenges when it comes to their federal tax returns. To that point, if you received any type of state rebate or payments in 2022, it may be in your best interest to seek professional tax assistance to make sure you meet those IRS requirements and are filing a proper return. For more advice to help you make smart financial decisions, check out CNBC's Financial Advisor Hub and Personal Finance section. Also, join the PF team's weekly Twitter Space, "This Week, Your Wallet," each Friday at 11 a.m. ET. Click here for a recording of last week's episode. Jim Pavia Senior Editor, Personal Finance @JIMPAVIA IRS says many state rebates aren't taxable at the federal level. Some may face filing struggle, tax pros warn The IRS on Friday issued state rebate and payment guidance for millions of filers urged to pause federal filings. Here's what taxpayers need to know. Here's the breakdown of the inflation report for January — in one chart High inflation persisted in January, with the consumer price index rising 6.4% on an annual basis. As Social Security's full retirement age moves to 67, some experts say it should not go higher Raising the full retirement age may be one option on the table to shore up Social Security. Why experts say the idea "doesn't work for this economy." House lawmakers relaunch the SALT caucus. 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