A tax expert said that a recent Internal Revenue Service (IRS) alert to millions of taxpayers that they should hold off on filing their tax returns is unprecedented.
On Feb. 10, the IRS issued new guidance on special payments that were made by 21 states last year. The came about a week after the agency told taxpayers to hold off so as to provide additional guidance on those payments and whether they are subject to federal taxes.
“The IRS has determined that in the interest of sound tax administration and other factors, taxpayers in many states will not need to report these payments on their 2022 tax returns,” the IRS said in its latest update. “The IRS appreciates the patience of taxpayers, tax professionals, software companies and state tax administrators as the IRS and Treasury worked to resolve this unique and complex situation,” it said….