This story is part of Taxes 2023, CNET’s coverage of the best tax software, tax tips and everything else you need to file your return and track your refund.
The IRS has finally issued guidelines on whether the millions of taxpayers who received a state tax rebate last year need to declare it on their federal tax return.
Robert Rodriguez/CNET
On Feb. 3 the IRS recommended that individuals who were issued “special tax refunds or payments” by their state governments should wait for additional clarification before filing their 2022 return.
The agency provided that clarity a week later, indicating that taxpayers in many states “will not need to report these payments .”
But, as always with the IRS, it’s complicated.
Here’s what you need to know about declaring your state stimulus checks on your federal tax return.
Which states sent out tax rebates in 2022?
There were no federal stimulus checks in 2022, but at least 22 states gave money back to residents — primarily in the form of income and property tax rebates, child tax credits and direct relief payments.
If you live in one of these states, you may have received funds in 2022:
Alaska, which provides a “Permanent Fund Dividend” to its residents every year, gave out the biggest payment — $3,124 to each eligible adult and child in 2022.
California issued the most payments: More than 31,650,000 Middle Class Tax Refunds were sent out by the Franchise Tax Board.
Is my state rebate payment taxable by the IRS?
The IRS has decided not to require taxpayers to declare payments related to “general welfare and disaster relief,” which includes checks tied to the COVID-19 pandemic.
It indicated money will not be taxable for residents who received payments from California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island.
That decision also applies to a portion of Alaska’s payment — the $662 that came from an energy relief payment. The rest of Alaska’s payment is taxable as federal income.
Read on: Do I Have to Pay Taxes on Social Security Benefits?
Who needs to pay taxes on their 2022 stimulus checks?
Residents in four states — Georgia, Massachusetts, South Carolina and Virginia — need to pay federal taxes on their state rebates if they itemized deductions in 2022 and received a tax benefit from those deductions.
Because the rebates in those four states were for state taxes paid, if a taxpayer took the standard deduction in 2022 or did not receive a tax benefit from state taxes (i.e. they hit the $10,000 limit), those state tax rebates or relief payments will not be taxable.
The IRS did not mention Minnesota, which provided a bonus payment to frontline healthcare workers in 2022. However, according to the Minnesota Department of Revenue, the payment are federally taxable and you should include it on line 8 of Form 1040.
For more tax tips, learn how to scan important tax documents with your phone or how to claim homeowner tax breaks.