Millions of people in California, Colorado, and other states who offered tax refunds the previous year are being urged by the IRS to postpone paying their taxes.
Tax Breaks, Exceptional Refunds
The purpose, according to the government, is to establish if these tax breaks and exceptional refunds are regarded as taxable income. The IRS stated on Friday that it planned to offer more clarification to as many states and taxpayers as feasible the following week.
As part of a relief program created by the state to assist citizens in coping with skyrocketing inflation at a time when the state had a budget surplus, around 16 million Californians got “middle-class tax rebate” checks of $350 per qualifying taxpayer last year.
Last year, a number of other states, including South Carolina, Colorado, and Illinois, approved tax refunds as a result of robust economic development and federal pandemic funding that had a positive impact on their state coffers.
However, those one-time windfalls are now making tax season difficult for millions of Americans, many of whom depend on timely tax refunds to pay off debt, buy something, or stay on top of their expenses. Last year, the average tax refund (for the 2021 tax year) was almost $3,200, a 14% jump from the prior year, according to IRS data — an amount that’s bigger than the typical worker’s paycheck.
Social media was used by some taxpayers to vent their anger over the IRS’s recommendation that they postpone completing their tax forms. On January 23, the organization began receiving returns for this year’s tax season.
An individual taxpayer said on Twitter, “So I tried to sit down this morning for a fun game of Do Your Taxes, but turns out the IRS hasn’t decided whether California’s Middle Class Tax Relief payments are taxable or not…
Seeking Assistance
Rep. Kevin Kiley, a Republican from California, wrote to the IRS to inform them that “many” citizens had called his office seeking assistance on the matter. The IRS responded by issuing the advise.
According to his letter dated February 2, “many of the 16 million California individuals who got the refund are unable to file a 2022 tax return because they do not have clear direction as to whether to include this money” as taxable income.
The best course of action is to wait for more information on state payments rather than phoning the IRS, the IRS suggested on Friday.
We also do not advocate changing a 2022 return that has already been submitted, it said, “since amended returns have gotten stuck in the IRS backlog, causing delays in processing.”
Other Reports, Tax Filing
According to a government announcement made on Thursday, the tax filing season will start on January 23.
The Internal Revenue Service will start taking tax returns for the 2022 tax year on that day. This year, the IRS anticipates receiving 168 million returns, which is a 4 million increase from previous year.
The reporting date for this year has been moved up three days to April 18. This is so because April 15 is on a Saturday and Emancipation Day in the District of Columbia is on Monday, April 17.
Taxpayers who were impacted by the storms in California have until May 15 to file.
The IRS is facing a number of difficulties as the filing season approaches, including a backlog of 10 million unprocessed returns, which is still a sizable amount of work.
The agency has engaged more than 5,000 more phone operators as well as in-person assistance personnel in order to assist struggling taxpayers, from whom just 1 in 10 callers were able to reach a telephone agent last year, it said.
