A Not So Timely Message From the IRS - Hold Off on Filing Your Return• https://mishtalk.com, By Mish
Here is the statement from the IRS on Taxability of State Payments
The IRS is aware of questions involving special tax refunds or payments made by states in 2022; we are working with state tax officials as quickly as possible to provide additional information and clarity for taxpayers. There are a variety of state programs that distributed these payments in 2022 and the rules surrounding them are complex. We expect to provide additional clarity for as many states and taxpayers as possible next week.
For taxpayers uncertain about the taxability of their state payments, the IRS recommends they wait until additional guidance is available or consult with a reputable tax professional. For taxpayers and tax preparers with questions, the best course of action is to wait for additional clarification on state payments rather than calling the IRS. We also do not recommend amending a previously filed 2022 return.
California sent out more than 16 million special Middle Class Tax Refund payments, worth $9 billion, to help counter inflation and high gas prices last year.
The Wall Street Journal notes that despite the IRS statement, H&R Block Inc. and Intuit Inc.'s TurboTax, two of the biggest tax-preparation companies, have continued to file returns for clients.