 Internal Revenue Service IRS tax news IRS issues guidance on state tax payments to help taxpayers Oh, no, we're being guided by the IRS again. That's not good That's like being guided by like Freddy Krueger, man, or infinitely worse like being guided by like Sam Smith Okay. Okay. Now you've gone too far even hyperbole has its limits. I mean the IRS isn't that scary Honestly being dragged into facing IRS audit is nothing compared to the horrible thought of being dragged in and forced to watch the Grammys You know, I mean that'd be terrible I did that'd be like having to face one of those Harry Potter Dementor things that like suck your soul out through your face You know like right out of your nose like they do in like that Harry Potter video game What what's that Phil? I'm a hate Phil jerk for playing the Harry Potter video game Well, actually Phil it wasn't me. It was my daughter who was playing the game. Oh Come on Phil. How can she be an evil turf? She's only nine She doesn't know what you're talking about Phil and JK Rowling's is her favorite author. Oh I see Phil you don't care and if she's playing the Harry Potter video game She deserves to die and in the name of tolerance You're calling on the mob to store my home to take my nine-year-old turf daughter's head Yeah That that that's me that seems awfully harsh Phil. I mean I I don't mean to be insensitive about your feelings on the matter Or anything and I know that this is gonna get me in trouble, you know with the HR department again But like I feel like calling on the storming of my home and the Decapitation of my nine-year-old daughter because she plays Harry Potter is it's a little extreme Phil I'm not I'm just saying I don't mean to be I'm just I'm not trying to be rude I'm just saying it seems like oh, I see you don't care and you're filling out an HR complaint about my hateful comments as we speak Well, whatever whatever you go. You just go ahead and do that then Phil. It's nuts. Nothing. I haven't seen before What what's that Phil? JK Rowling's will be financially ruined after the righteous boycott She should have taken our advice like all the other IPs You know like Star Wars Marvel and Scooby-Doo if she wanted her Harry Potter revenue to continue What you just said is One of the most insanely idiotic things I have ever heard At no point in your rambling incoherent response Were you even close to anything that could be considered a rational thought? Everyone in this room is now dumber for having listened to it. I award you no points and May God have mercy on your soul. I are 2023-23 February 10th 2023 Washington the Internal Revenue Service provided details today clarifying the federal tax status involving special payments made by 21 states in 2022 the IRS has determined that in the interest of sound tax administration and other factors Taxpayers in many states will not need to report these payments on their 2022 tax returns so that you would think would generally be a good thing in other words the general rule for an income tax type Of system is that income is actually bad for taxes because if you have to report the income then of course It's likely that you'll be paying taxes on the income The general rule with regards to whether or not you have to report the income is that you do unless the iris has a specific exception Saying that you don't have to record it. That's how it generally is laid out In the tax code so here if you have something that you can be considered as income and inflow of cash In some way shape or form that doesn't need to be recorded on the tax return then that of course could be a good thing So during a review the IRS determined it will not challenge the tax ability of payments related to general welfare and disaster relief This means that people in the following states did not need to report these state payments on their 2022 tax return so California Colorado Connecticut Delaware Florida Hawaii Idaho Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island Alaska is in this group as well, but please see below for more nuanced information. So Alaska They got a bit of an exception of seems so in addition many people in Georgia, Massachusetts South Carolina and Virginia also will not include state payments in income for federal tax purposes if they meet certain Requirements, okay, here's we go with the exception. I knew it. I knew there'd be one 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 So you've got kind of this issue with regards to the state tax payments that you're probably aware of or have some concept of in that for the federal government side of things The state taxes sometimes might be a deduction now They would only be a deduction if you're taking itemized deductions, which usually means that's going to be a higher income individuals and more people than usual or more people than like a few years ago Actually take the standard deduction most people take that the standard deduction now because the thought process was to simplify the code They would increase the size of the standard deduction and have less of these kind of itemized things so everything's kind of standardized For everyone, but the problem is that if you take a deduction for your state taxes on the federal tax return As an itemized deduction It's possible that you kind of overstate it because you then get a refund from the state And so you can imagine people trying to cheat on the tax return basically by saying I'm going to overpay my state taxes Deducted on the federal tax return and then I'm going to get a refund from the state taxes So I didn't really pay that amount of the state taxes so basically if you got a benefit for the taxes in the prior year Then you might have to you know record it because you got a deduction for it You might have to record it basically as income In the following year if you got if you got like a refund on it So that's the so that kind of throws a wrench Into some of the some of the workings of this in my opinion if if they if they started the tax code over from scratch They should have set up a system where they weren't deducting state taxes on the federal side because that messes up The whole thing but of course now that the tax law is already in place if they just pull the rug out Then it kind of messes things up and you can see which states would benefit from this obviously States that have a high tax are kind of taking advantage You I would you know I think it could clearly be argued of the state tax deduction because it's kind of a way that you can subsidize You know from the federal government by deducting By deducting it and so those would be like California and New York for example So the IRS appreciates the patience of taxpayers tax professionals Software companies and state tax administrators as the IRS Treasury worked to resolve this unique and complex situation The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022 a variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex Yeah, I would think so while in general payments made by states are included Includable in income for federal tax purposes. So usually when you get unemployment and stuff from the state It's taxable. There are exceptions that would apply to many of the payments made by states in 2022 so because of all these changes in the law and these different kind of state payments and whatnot the IRS looks like just for ease For the ease of it is trying to say well, we're just going to give up on those particular payments So to assist taxpayers who have received these payments file their returns in a timely fashion The IRS is providing the additional information below So you got the refund of state taxes paid if the payment is a refund of state taxes paid and either the recipient Claimed the standard deduction or itemized deduction their deductions But did not receive a tax benefit for example because the $10,000 Tax deduction limit. So that's another issue with regards to the To these to the itemized deduction of the state taxes. They capped them at $10,000 So you would think wealthy more wealthy individuals would be the ones that are itemizing that might be able to deduct the state taxes But then it was like you guys are getting way too out of hand on The state tax thing and certain states seems like they're kind of taking advantage of it So they kind of capped it at the $10,000, which was a big Issue from state to state on on different taxes And so you might not be getting a benefit from the state tax deduction either because your standardized deduction You're not itemizing or because you are itemizing But your income is high enough that that now you don't get the benefit because you went over the $10,000 of the deductible amount on the itemized deduction so it gets quite complex quite quickly So the payment is not included in income for federal tax purposes if you didn't get the benefit in the prior year from the deduction Okay, payments from the following states in 2022 fall in these categories and will include from income for federal tax purposes unless So what once more time payments from the following states in? 2022 fall in this category and will be excluded from income for federal tax purposes unless the recipient Received a tax benefit and the year the taxes were deducted. So you got Georgia, Massachusetts, South Carolina, Virginia So general welfare and disaster relief payments if a payment is made for the promotion of the general welfare Or as a disaster relief payment for example related to the outgoing pandemic It may be Excludable from income for federal tax purposes under the general welfare doctrine or a qualified disaster relief payment Determining whether payments qualify for these exceptions is a complex fact Intensive inquiry that depends on a number of circumstances. Well, that's thank you for clarifying that one So the IRS has reviewed the types of payments made by various states in 2022 that may fall in these categories and given the complex complicated fact specific nature of determining the treatment of These payments for federal tax purposes balanced against the need to provide certainty and clarity for individuals Who are now attempting to file their federal income tax returns? The IRS has determined that in the best interest of sound tax administration and given the fact that the pandemic emergency declaration is ending in May 2023 making this an issue only for 2022 tax year if a taxpayer does not include the amount of one of These payments in its 2022 income for federal income tax purposes the IRS will not challenge the treatment of the 2022 payment as Excludable for income on an ongoing or amended return Wow, that was one sentence right there that like paragraph was like one sentence I'm out of breath at this point in time So that sounded like a very long-winded way of saying that they're backing off a bit on that one It sounds like but you know you make your own judgment payment from the following states Fall in this category and the IRS will not challenge the treatment of these payments as Excludable for federal income tax purposes in 2022. You got Alaska, California, Colorado, Connecticut Delaware, Florida, Hawaii, Idaho, Illinois Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island For a list of the specific payments to which these applies, please see the chart So there's a chart you can link to that and say what in the world are you talking about? All right, and then you can look at that So there's a link to that other payments other payments that may have been made by states are generally Includable in income for federal income tax purposes. This includes the annual payment of Alaska's permanent fund Dividend and any payments from states provided as compensation to workers So only the supplement energy relief payment received in addition to the annual permanent fund Divided these are some some footnotes down here. So you got some footnotes. I won't go into the footnotes But you know, you could check them out if you want to read this on your own So hopefully that that clears everything up I'm sure everyone questions answered problems solved and Everything is we know what we know what to do. I know what to do now after that But if you're still confused, there'll be a link to this in the description and you can link to the links that are here And you can read up on it more and most likely confuse yourself further