A little-known state law in Massachusetts will enable eligible taxpayers to receive a generous refund. The 62F stimulus checks coincided with the festive season. Chapter 62F of the Massachusetts General Laws states that if state tax revenue collection exceeds a cap tied to wage and salary growth, the surplus amount must go back to resident taxpayers.
This is only the second time after 36 years that the Massachusetts tax credit has been triggered. The state administration has revealed on its website that the state tax revenues for the fiscal exceeded the cap on collection by $2.941B. This sum will go back to resident taxpayers either by direct deposits or paper checks delivered through the US Postal Service.
Gov. Baker stated that preliminary estimates reveal that the refunds could be around 13% of the personal tax liability of taxpayers in 2021. But there is a chance that the estimate could stand updated once the income tax returns are all filed.
So it stands that the stimulus checks from the Massachusetts administration under 62F rules went out to residents and non-residents who filed their stated income tax returns for 2021. Filers who have procrastinated on their payments and are yet to pay the payments can do so by September 15 this year and still collect the stimulus checks.
The expected time frame for refunds to be issued was November last year. But the payments have continued as around $150 million of the $2.9B earmarked to be returned remain unpaid. So people who are yet to file their 2021 income tax returns for Massachusetts can do so immediately though they have time until September 15 this year.
Individual refunds can stand reduced if the refund intercepts, which can include unpaid tax liability or due child support payments. Filers in Massachusetts can also use this online estimator to calculate their estimated refund through information from their state income tax returns.
Gov. Charlie Baker’s administration has already finished distributing the over 3M rebates for residents of Massachusetts under the 62F state revenue cap law. State administrative officials say that they have now issued refunds to all eligible taxpayers who have filed their state income tax returns for 2021 by end-October. A revenue department spokesperson has revealed that most of the payments have been completed though some of the paper checks would be delayed as they will go out through the US Postal Service.
IRS Initially Asked Filers In States Receiving Inflation Stimulus Check To Delay Filing Returns
Even several weeks into the tax season, people in states that have sent out inflation relief stimulus checks to residents were waiting for clearance from the IRS to start filing their returns. Residents had benefitted from the various inflation relief schemes started by the states in the absence of any form of federal stimulus checks in 2022.
But unlike the economic impact payments, which had clear guidance from the Internal Revenue Service, residents were left confused about the tax filing treatment of these state payments and could get no help either from the tax authorities or from instruction from the IRS.
The federal tax authorities dithered on the right treatment for such payments. It was made complicated by the fact that each of the states termed the payments differently and reported confusion among residents on the total taxes.
What options did taxpayers have at this instruction?
The IRS has reported that the rules are complex and so is the advice it was forced to give. For perhaps the first time, the IRS was forced to advise people to wait to file their income tax returns if they were not sure of the tax status of the stimulus check they received from their states by way of inflation relief measures.
And simultaneously, the revenue service said that people who had filed their federal income tax returns should not bother about it as they said they would advise against amending any previously filed income tax return for 2022.
The IRS has also said that people who have received inflation relief stimulus checks and have already filed their federal income tax returns for 2022 should not consider it as a cause for worry. It has stated that taxpayers who have already filed their income tax returns should not consider amending them without clear instruction from the tax authorities.
Residents of most of the 20-odd states that have sent out the inflation relief payments received it without having to go for any separate application. While some programs have set income limits, others have given out stimulus checks to all residents of the state who have filed the state income tax returns for the previous year.
Some states, including Illinois, have issued income tax rebates to people who have paid their property tax. Others like Florida and Rhode Island have favored sending out stimulus checks to families with dependent children.
The states that have been most affected by the limbo during the tax season do not include all the states that have sent out stimulus checks. The IRS has informed us that it is looking specifically at cases that involve special refunds and payments from the 2022 tax year.
Reports differ on which of the state inflation relief programs might come under the purview of the IRS’s rules regarding the state inflation relief payments. It appears that it will not be all the 20-odd states that have sent out stimulus checks.
The IRS has reported that it was in talks with income tax officials in states giving out stimulus checks for inflation relief. This will help them determine how filers who reside in such states should handle such payments on their income tax returns.
The state inflation relief payments were caused by a rare convergence. Even as consumers took a beating with the abrupt spurt in inflation. But at the same time, most of these states reported a huge budget surplus as the economy bounced back immediately after the depression and states suddenly found themselves flush with money. Some states even gave out stimulus checks worth thousands to residents with extended families.
