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IRS Tells Millions of Taxpayers to Wait to File Returns

The Motley Fool logo The Motley Fool 2/7/2023 Maurie Backman
Couple working on taxes. © Getty Images Couple working on taxes.

What happened

The IRS is advising millions of taxpayers to hold off on filing their tax returns until the agency can issue guidance on whether state rebate checks issued in 2022 will count as taxable income. Last year, 19 states approved stimulus or rebate payments, and the IRS still hasn't figured out what tax treatment will apply to those funds.

So what

If you have already filed your 2022 returns, the IRS does not recommend changing your submission.

"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,” the IRS said in a statement. “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.”

If you have not filed your 2022 tax returns yet or have questions about how you should file, the IRS recommends you “wait for additional clarification on state payments rather than calling the IRS.”

Now what

This year, taxes are due on April 18, so if you need to delay your filing for a bit, don't sweat it -- there's still plenty of time to get in before the deadline. Of course, you may have to wait a bit longer for your refund to hit your bank account, but you can get the ball rolling by finding yourself a tax preparer as soon as possible.

Your best bet in that regard is to ask for recommendations from friends, neighbors, and colleagues. And of course, always check a tax preparer's credentials before signing up to work with them. The IRS has a directory you can use for this purpose.

That said, you may not need to hire a tax preparer, and you may be eligible to file your taxes on your own for free if your adjusted gross income is $73,000 or less.

Even if you're required to pay taxes on your state rebate check, there are other steps you can take to eke out savings. Claiming the right deductions, whether it's mortgage interest or IRA contributions, could help lower your tax burden. There are also numerous tax credits you may be eligible for, from the Earned Income Tax Credit to the Child Tax Credit (which did not go away in 2022, but rather, reverted to its non-boosted value). It pays to explore these individually or with the help of a tax preparer.


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Our independent analysts pored over the perks and user reviews for the most popular tax provider services to land on the best-in-class picks to file your taxes. Get started by reviewing our list of the best tax software.

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