The Internal Revenue Service (IRS) is telling millions of people to wait to file taxes until they can clear up filing confusion later in the week.
Key Details
- The IRS is telling tax filers to hold off until the service can clarify whether some state refunds can be claimed as taxable income.
- Multiple states sent out payments to help citizens during high inflation and gas prices last year, and the IRS is still determining if the payments should be filed as taxable income.
- The IRS says it will make a decision and a formal announcement with the answer later this week and that any tax filer with questions should wait to file until after the announcement.
Why it’s news
It is officially tax season in the U.S. as taxpayers file and eagerly await their returns, but the IRS is telling some filers to hold off.
The IRS is telling millions to wait to file their taxes until the service can formally announce whether several refunds issued across the states last year can be filed as taxable income. The refunds were issued to help many U.S. families during high inflation and soaring gas costs.
The IRS says it will announce the decision later this week, and those with questions should wait until after the announcement to file.
“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,” says the IRS.
Despite the IRS telling filers to hold off, many continue to file and typically assume that the payments are not taxable.
California sent out more than 16 million special Middle-Class Tax Refund payments worth $9 billion, and tax authorities have said that the payments aren’t taxable for state-income-tax purposes but may be for federal purposes, according to Wall Street Journal writer Ashlea Ebeling.
Many authorities remain unsure of what is taxable and are waiting for the statement from the IRS.