Last year, millions of Americans in nearly half of the states received rebates, tax refunds, one-time payments, or other forms of stimulus cash. Although federal payments had long since dried up, those state initiatives provided much-needed assistance during a year of excruciatingly high inflation. This article will give you stimulus update information.
A stimulus check is a payment made by the federal government to a taxpayer. Paper check or direct deposit makes stimulus payments. They are intended to encourage spending during economic downturns and thus boost the economy. Stimulus payments can be part of a larger federal stimulus package designed to support the economy, as was the case with the CARES Act in 2020 and the American Rescue Plan in 2021.
For the vast majority of Americans, 2022 was the last saving grace for the foreseeable future. This year, only a few states have similar initiatives on the table. Several states, however, are still disbursing payments from last year’s programs, and a few are still accepting applications or qualifying tax returns.
Late in the game, the IRS demonstrated why it’s not always wise to file your taxes as early as possible, thus creating the issue that most people will face in 2023 concerning how last year’s state stimulus payments will be taxed.
Your Stimulus May Not Be Taxable
The most significant update came in the form of late IRS guidance. After much speculation and debate, the agency finally announced in mid-February that the majority of people who received special payments in the 21 states that issued them are not required to report their stimulus checks as income.
Taxpayers are typically required to report income tax refunds, but the IRS has ruled that most payments qualify as general welfare or disaster relief, neither of which is taxable at the federal level. The decision applies to stimulus payments issued by the following states in 2022:
- New Jersey
- New Mexico
- New York
- Rhode Island
Residents in the following states will not have to report stimulus payments as income if they meet certain criteria. They must have received a refund for state income taxes paid and either itemized or claimed the standard deduction without receiving a tax benefit:
- The state of South Carolina
States That will Have Stimulus Payments with Residents’ Tax Returns This Year
The Following states will have stimulus payments this year;
The state’s Middle Class Tax Refund has benefited approximately 32 million California taxpayers and their dependents. Payments were expected to be made between October 2022 and January 2023, with amounts ranging from $200 to $1,050. This depends on income, dependents, and tax filing status.
Depending on income, dependents, and tax filing status, payments ranged from $200 to $1,050. Most have already been issued, according to the tax board, though “payments requiring additional review are still being processed.”
Colorado Governor Jared Polis signed legislation in May 2022 that will provide Coloradans with a tax rebate of $750 for single filers and $1,500 for joint filers. Residents received “immediate relief” payments, which arrived in the form of checks in 2022 rather than 2023.
To be eligible, residents had to file their returns by October 17, 2022. Those who applied for an extension prior to that date but have yet to be paid can contact the Colorado Department of Revenue or visit the state’s Department of Taxation website.
The 2022 Delaware Relief Rebate Program, enacted through a state House bill in 2022, established a onetime $300 payment known as a “relief rebate” to combat inflation and gas costs in the aftermath of COVID. Payments began in May 2022 to those who had filed their 2020 resident personal income taxes by the deadline.
They reportedly made over 787,000 payments to adult residents who filed their 2021 tax returns on time between May 2022 and February 2023. Those who are experiencing payment delays for whatever reason can check the state website for updates.
The Idaho Legislature approved a Special Session rebate in September that paid taxpayers either 10% of their 2020 income tax liability or up to $300 ($600 for joint filers)—whichever was greater—if they were full-time residents in 2020 and 2021 and also filed an Idaho individual income tax return or a Form 24 to qualify.
The Illinois Family Relief Plan, which went into effect on July 1, 2022, included an estimated $1.83 billion in relief, including income and property tax rebates, as well as a temporary reduction in several sales taxes.
The government will provide $50 income tax rebates to individuals earning less than $200,000 in 2021, and $100 income tax rebates to couples filing jointly earning less than $400,000. Tax filers will also receive $100 for each dependent claimed on their 2021 taxes, up to a maximum of three dependents.
Indiana citizens who filed a tax return for the 2020 tax year before December 31, 2021, were eligible for $125 and $200 automatic taxpayer rebates in 2022 as a direct deposit or a cheque (either separately or combined), for a total of $325 (or $650 for those filing jointly).
Those who meet the criteria can now receive the $200 rebate as a refundable tax credit.
Maine offered $450 payments as part of its 2023 Emergency Winter Energy Relief Plan to persons who submitted their 2021 Maine tax return by October 31, 2022, were full-time residents, and were not claimed as a dependent on another tax return. All payments were expected to be completed by the end of March 2023.
Virginians who filed their 2021 tax returns before November 1, 2022, were entitled for the state’s one-time rebate payment of up to $250 for single filers and $500 for joint filers. Those who filed before September 5 should have received their rebates by now, while those who filed after that date should receive their rebates later this year.
South Carolina began distributing tax refund checks in November, with some receiving up to $800. Taxpayers had until October 17 to file returns, but those who filed before February 15 of this year are still eligible and will get compensation at an unspecified period this calendar year.
Rhode Island rebates were first given in October to qualified taxpayers. These taxpayers got $250 per kid, up to a maximum of $750, if the child was 18 years old or under at the end of 2021. Married couples filing jointly with a federal adjusted gross income of $200,000 or less qualified, whereas other filing cases required a federal adjusted gross income of $100,000 or less.
Pennsylvania residents, including senior citizens, homeowners, and those with disabilities, were able to file returns between July 2022 and December 31, 2022. Those who qualify should receive between $250 and $975. This depends on their income and whether they rent or buy a property.
Single taxpayers in New Mexico received $500, while married couples, heads of households, and surviving spouses received $1,000. The rebates are expected to be distributed by June.
Income-based reimbursements are being mailed to qualifying New Jersey households and are expected to arrive by May 23. Homeowners earning up to $150,000 are eligible for $1,500, while those earning between $150,000 and $250,000 are eligible for $1,000. Renters in the state who earn less than $150,000 a year are eligible for $450.
If Massachusetts residents file their 2021 forms before October 17, 2022, it will entitle them to a refund. This will be equal to approximately 14 percent of their 2021 state income tax liability. Payments were initially delivered on November 1 and were expected to reach qualified taxpayers by December 15. They should pay those who filed after October 17 but before September 15 of this year within a month.
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