Breitbart News reports that California’s far-Left Gov. Gavin Newsom (D) provided residents with a “Middle Class Tax Refund” right before his reelection last year, but recipients of the checks may have to pay tax to the IRS.
Some households received checks of up to $1,050 from the state — a transfer that economists pointed out was likely to increase inflation, even while appearing to help, because of increased government spending. Those who received $600 or more were sent a 1099-MISC income tax statement by the state.
Moreover, the “refunds” were not technically tax refunds, which has led some tax preparers to advise clients to declare them as income when they file their federal tax returns. The San Francisco Chronicle recently reported that confusion has set in over how to handle these payments as tax season gets underway. Some major tax-preparation companies have been treating it as not taxable, while other tax professionals believe it is.
The bill that authorized the payments exempted them from state income tax. Although the bill called them refunds, it also said they “shall not be a refund of an overpayment of income taxes.”
The IRS is expected to issue guidance to taxpayers on how to report their “refunds.” What California taxpayers can expect, as always, is to get screwed by the government.