You might have to start over if you submitted an early tax return. In 21 states, the IRS is recommending taxpayers to think about filing an amendment. The good news is that you may wind up needing to submit less taxable income if you are affected.
The IRS advised millions of individuals to file updated tax returns on April 11 after a decision on stimulus checks was reached. The question of whether the payments, which many states made last year to assist citizens through the COVID-19 pandemic’s last stages, could be considered taxable income has perplexed the IRS.
It recommended taxpayers not to file their returns early while it deliberated. But not everyone followed that counsel. Now that the agency has determined the stimulus cheques are not taxable, anyone who filed a return and included the payouts is at risk of paying more tax unless they make the necessary corrections.
IRS: Taxpayers in 21 states should consider amending returns https://t.co/QwEPLvA41r
— ABC 10News San Diego (@10News) April 12, 2023
Up to 28.8 million taxpayers who submitted their tax returns prior to February 10 are impacted by the new advise; nevertheless, the IRS reports that this number is only 0.8% lower than it was the previous year. Alaska, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Indiana, Maine, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, South Carolina, Rhode Island, and Virginia are the states getting involved.
The IRS is now advising anyone in these states who prepared their taxes early and included stimulus money as income to see if they paid the extra tax. If so, they ought to submit an amendment. You can complete this on the internet or with a paper copy, but the IRS claims that electronic returns will result in faster refunds.
Fortunately, there’s no pressure to finish this. The IRS will accept modified 2022 tax returns until April 2026, even though the filing date for 2022 tax returns is April 18. It is better to submit a revised version as soon as you can because any refund you receive at that time will be significantly worth less due to the high rate of inflation.
