Tax Byte

IRS: Taxpayers Who Reported Certain 2022 State Refunds as Taxable Should Consider Filing Amended Return

The IRS announced today that taxpayers who filed their federal income taxes earlier in this year’s filing season AND reported certain state 2022 tax refunds as taxable income should consider filing an amended return.

To Tax or Not to Tax: That WAS The Question

You might recall that on the heels of a February Procedurally Taxing post, the IRS released a statement noting that it was aware of taxpayer uncertainties involving special tax refunds or payments made by states during 2022 and was working to determine whether those payments are subject to federal tax.

  • On February 3, the IRS recommended against filing an amended return until it determined the tax treatment of these state refunds and payments.
  • On February 10, the IRS provided details clarifying the federal tax status involving special payments made to taxpayers by 21 states in 2022, noting that it had determined that taxpayers in many states did not need to report these payments on their 2022 tax returns.
  • Today, the IRS advised taxpayers who reported such state payments as taxable income on their 2022 tax return to consider filing an amended return.

Taxpayers can see a listing of individual states and the federal tax treatment of their special state refunds or rebates in today’s IR-2022-77. If necessary, taxpayers who submitted their original 2022 tax return electronically can also file their amended return electronically and may select direct deposit for any resulting refund. Direct deposit is not available for a paper amended return.


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