Most taxpayers in states that gave some kind of stimulus or tax rebate payment last year will not have to report them on their federal returns this year. However, some residents in four states will have to.
According to guidance issued by the Internal Revenue Service (IRS) earlier this month, taxpayers in 17 of 21 states that handed out such payments last year don’t have to report them on their federal taxes.
However, taxpayers in Virginia, Georgia, South Carolina, and Massachusetts who got tax refunds and claimed the state and local tax itemized deduction under certain circumstances will have to pay federal taxes in light of those payments. Residents in those states who itemized their deductions and did not reach the $10,000 cap on deductions for state and local taxes could fall into that category, according to Bloomberg News….