Millions of Americans in nearly half the states in the country received rebates, tax refunds, one-time payments or other forms of stimulus cash last year. Although federal payments dried up long ago, those state initiatives delivered much-needed assistance in a year of painfully high inflation.
For most of America, 2022 was the last helping hand for the foreseeable future. Very few states have similar initiatives on the table this year. However, several states are still distributing payments from last year’s programs, and a few are still accepting applications or qualifying tax returns.
But the issue that affects most people in 2023 comes from a long-awaited decision on how last year’s state stimulus payments will be taxed, with the IRS proving late in the game why it’s not always wise to file your taxes as early as possible.
If You Received Stimulus in 2022, It’s Yours To Keep — Probably
The biggest update of all came in the form of late guidance from the IRS. After much speculation and debate, the agency finally announced in mid-February that most people who received special payments in the 21 states that issued them don’t have to report their stimulus checks as income.
Typically, taxpayers are required to report income tax refunds, but the IRS has ruled that most payments count as general welfare or disaster relief, neither of which are taxable at the federal level. The ruling applies to stimulus payments that the following states issued in 2022:
- New Jersey
- New Mexico
- New York
- Rhode Island
Alaska is on the list, too, but with an asterisk. Permanent Fund Dividend (PFD) payments that nearly all Alaskans receive are generally taxable, but the special Energy Relief Payment that the state distributed in addition to standard PFD payments in 2022 is not.
In addition, 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 from state income taxes paid and either itemized their deductions or claimed the standard deduction without receiving a tax benefit:
- South Carolina
There’s Still Some Stimulus Money on the Table in 2023
A handful of states still have stimulus payments on their schedules for 2023. Some are distributing outstanding payments to residents who applied before deadlines that have since passed, but others are still open and accepting applications or qualifying income tax returns.
The state’s PFD filing season is now open for 2023. Residents can file their applications online through March 31 or visit one of the state’s PFD offices to apply in person. PFD applications from 2022 and prior years that are listed as “eligible-not paid” on March 8 will be distributed on March 16. Applications in “eligible-not paid” status on April 12 will be distributed on April 20.
Eligible Massachusetts residents can still claim their share of the state’s 62F Taxpayer Refund program. Thanks to a revenue surplus, qualified residents will get back a little more than 14% of their state income tax liability for tax year 2021 as long as they file that year’s returns by Sept. 15. Residents can expect to receive their refunds about one month after they file.
Eligible New Jerseyans were required to submit their ANCHOR property tax relief applications by Feb. 28. Qualifying renters will receive $450 and qualifying homeowners will receive up to $1,500. All payments will be made by check or direct deposit no later than May.
New Mexico has paid out most of its 2022 rebates, which are good for up to $1,500. But residents who don’t typically file tax returns can still claim rebates of $500 or $1,000, depending on their filing status, if they file a 2021 state income tax return by May 31.
Most eligible South Carolinians filed their 2021 tax returns and received their 2022 rebates by the original Oct. 17, 2022, deadline. But those who took the Hurricane Ian disaster relief extension, which gave them until Feb. 15 of this year, can expect to receive their rebates of up to $800 in March.
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