The IRS issued a statement last week warning taxpayers in certain states, including Georgia, to delay filing because they didn’t do their homework before tax season. They’ve since released another statement saying certain state payments, including one from Georgia, might be taxable. Thanks, IRS, for being so helpful!
History – Last year, Georgia and many other states had big budget surpluses, and since it was an election year, and Kemp (and other governors) wanted to keep his job, he gave some of that money back to the voters, er, taxpayers (us). Some states called it “stimulus” or “economic impact payments” while others (including Georgia) called it a “tax refund”. Well, the IRS taxes state refunds if you itemize personal deductions. They don’t tax stimulus and economic impact payments.
So, if you live in Georgia, and you received an “extra refund” last year of up to $500, and you itemized personal deductions (the vast majority of you use the standard deduction instead), then you may owe the IRS tax on the up to $500. Even at the worst tax rate, it’s only $195. We don’t know if the IRS will try to collect this money or if it’s even going to survive legal challenges.
Bottom line – don’t wait to file your taxes. Likely, you aren’t affected, but even if you are the IRS may not try to collect, and even if they do, it won’t be much $$.
As always, feel free to call or email our office if you have any questions or concerns or this just didn’t make any sense at all :/