BusinessThe IRS declared tax payments from 4 states taxable: why

    The IRS declared tax payments from 4 states taxable: why

    After last week, the Internal Revenue Service (IRS) of the United States, asked 20 states to postpone the presentation of their taxes while it was possible to clarify whether the refunds issued last year were considered taxable income or not.

    According to the recent ruling of the Internal Revenue Service, it clarified that Georgia, Massachusetts, South Carolina and Virginia taxpayers who received state tax refunds and also claimed the state and local tax deduction (SALT) without exceeding the cap, must pay federal taxes on those paymentsand stressed that the remaining 17 states will not have to pay any federal taxes.

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    But why these four states if they are subject to federal taxes? The answer lies in how they designed their statements. For Jared Walczak, vice president of state projects for the Tax Foundation, “the IRS has selected these four states because they structured their refunds as tax refunds,” he said,

    That is, the IRS considers this return form as a reduction to your state tax liability. Vivian Paige, a Norfolk-based certified public accountant, explained that “the tax benefit rule says that to the extent you deducted something in the past and then got a refund, the refund amount is subject to taxs”, he stressed.

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    On the other hand, the Internal Revenue Service indicated that taxpayers from these four states who took the standard deduction or who took the SALT deduction but exceeded the limit of $10,000 thousand dollars will not be affected.

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    Source: La Opinion

    This post is posted by Awutar staff members. Awutar is a global multimedia website. Our Email: [email protected]


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