If You Already Did Your Taxes, You May Need to File an Amended Return, IRS Warns

A change could affect taxpayers in 21 different states.

Tax Day is just five short days away, so it's crunch time for any procrastinators. While the stragglers rush to submit the necessary info to the Internal Revenue Service (IRS), those of us who have already filed can take comfort in knowing we're all squared away. But don't be so quick to put your feet up this tax season: The IRS just issued a warning that early filers in 21 states may need to submit an amended return. Read on to find out if this applies to you.

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The IRS was forced to make a call about pandemic-related state payments.

stimulus payments
Jeff McCollough / Shutterstock

At the beginning of the current tax season, the IRS was still deciding whether or not special payments made by certain states to taxpayers would need to be reported as income on 2022 returns. Those who filed in January or early February were forced to use their best judgment, or that of a financial advisor.

It wasn't until Feb. 10 that the IRS released its official ruling.

"The IRS is aware of questions involving special tax refunds or payments made by certain states related to the pandemic and its associated consequences in 2022," the agency's press release reads. "A variety of state programs distributed these payments in 2022 and the rules surrounding their treatment for federal income tax purposes are complex."

In the press release, the IRS noted that state payments are typically included as income, but for 2022, it would make exceptions.

Residents in 21 states should take note of the February ruling.

Calculating tax return with cash
Leonid Sorokin / Shutterstock

The IRS' decision that certain state payments would not need to be included as taxable income affects taxpayers in 21 states.

Residents of California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania, and Rhode Island don't need to report state payments related to general welfare and disaster relief paid in 2022. Alaska residents are also impacted; however, this ruling only applies to the special Energy Relief Payment that was disbursed.

A list of applicable state payments is included on the IRS' website.

Georgia, Massachusetts, South Carolina, and Virginia residents are also impacted by the decision, and aren't required to report special state tax refunds as taxable income if they meet specific requirements. You don't need to include a payment if it was a refund of state taxes you paid and if you claimed the standard deduction or itemized deductions, but didn't receive a tax benefit.

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You can fix any mistakes by submitting an amended return.

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If you live in any of these states and filed before the IRS decision was released, you'll want to give your review a second look and "consider filing an amended return," according to an April 11 press release from the IRS.

"Taxpayers who filed before Feb. 10 in these areas and meet these requirements should check their tax return to make sure they paid tax on a state refund before filing an amended return," the IRS press release reads. "In addition, taxpayers in this situation who used a tax professional can consult with them to determine whether an amended return is necessary."

As of Feb. 10, the IRS had received approximately 28,826,000 tax returns, according to filing season statistics.

You can file either electronically or by mail.

1040 individual income tax return form and money. Tax payment, filing taxes and financial planning concept1040 individual income tax return form and money. Tax payment, filing taxes and financial planning concept
iStock

In the event you do need to make changes, the IRS makes it pretty simple. If you filed your 2022 return electronically, you can file your amended return the same way, and select direct deposit for any additional refund that may result.

This capability is actually new in 2023, according to a Feb. 9 press release. Previously, even if you filed an amended return electronically, you would have to wait for a hardcopy check to arrive in the mail.

"This is a big win for taxpayers and another achievement as we transform the IRS to improve taxpayer experiences," IRS Acting Commissioner Doug O'Donnell said of the ability to select direct deposit. "This important update will cut refund time and reduce inconvenience for people who file amended returns. We always encourage direct deposit whenever possible. Getting tax refunds into taxpayers' hands quickly without worry of a lost or stolen paper check just makes sense."

The latest press release notes that you can still submit a paper version to amend your return (Form 1040-X) and receive a hardcopy check if you prefer. Direct deposit is not available for paper returns, and the IRS did reiterate that filing online speeds up the process.

After you submit your amended return—either electronically or on paper—you can check its status via the Where's My Amended Return? tool.

Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.

Abby Reinhard
Abby Reinhard is a Senior Editor at Best Life, covering daily news and keeping readers up to date on the latest style advice, travel destinations, and Hollywood happenings. Read more
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