After much outside criticism, the Internal Revenue Service basically told taxpayers in most — but not all — states that they do not need to report income from special state tax refunds or payments on their 2022 federal income tax returns.
Tens of millions of taxpayers in 21 states — not including Michigan — were told a week earlier to hold off filing their federal income tax returns until the IRS could give guidance. The IRS gave such guidance late Friday — and taxpayers should be able to move forward.
The National Taxpayer Advocate issued a highly critical blog Thursday that questioned why the IRS waited so long to address whether special tax refunds or payments will be treated as taxable income on a federal income tax return. Tax season began Jan. 23, but the tax filing deadline isn't until April 18.
Susan Tompor | USA TODAY