The Internal Revenue Service is advising millions of Americans to hold off on filing their taxes this year. The agency said it is still clarifying rules on whether refund and rebate payments sent out to taxpayers in several states should be classified as taxable income.
Eighteen states sent refund checks to taxpayers in 2022 to help blunt the impact of soaring inflation and record-high gas prices. Those states include Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Mexico, New York, Oregon, Rhode Island, South Carolina, and Virginia.
Because the purpose of the checks varies by state, the rules over whether they are considered taxable income are unclear. For example, rebate checks in California were not taxed by the state, but officials noted the money could be subject to federal taxes.
However, in Virginia, it is even more complicated. Those who received the one-time payment and itemize their taxes must count it as taxable income, while those who take the standard deduction don't.
The IRS said it hopes to clear up the confusion and issue updated guidance by next week.
If you have already filed your taxes, the IRS said it is not necessary to file an amended return at this time. Instead, the agency said that those people should wait until it provides further instructions.