Federal and state officials sent different forms of stimulus checks during the wake of the pandemic and the soaring inflation rate. Still, many were asking if those stimulus checks were taxable or not.
Stimulus Checks Sent To Millions of Americans
Millions of Americans received stimulus checks from federal and state officials during the wake of the pandemic and the soaring inflation rate. It aimed to help and support different families combat the negative economic impact of these uncertain times.
Still, many were asking whether the stimulus checks they received were taxable or not. According to a report published in The Motley Fool, not all stimulus checks that were distributed via direct deposit or in the mail are subject to tax.
How To Determine if the Stimulus Check is Subject to Tax?
The stimulus checks sent by the federal government during the COVID-19 pandemic were advances on tax credits. This means that you do not owe any tax to the Internal Service Revenue on your federal stimulus checks.
However, some states reported to the IRS that the stimulus checks they sent were part of the income. An example of this is the California Franchise Tax Board which decided that it would report the middle class refunds the state was sending out to the IRS if the stimulus check would be $600 and above.
On the other hand, the state of Colorado has already said that its Cash Back tax refund is not considered taxable income. Furthermore, one of the best ways to find out is to check your mail to see if you receive a 1099-MISC form. If you received this form this just means that your stimulus check is subject to tax.