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Federal Tax Decision on MA Excess Tax Revenue Refunds

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The IRS has just announced that MA taxpayers who claim standard deductions do not need to report the state tax refund as taxable income when they file their federal tax return.

The only people who do need to report the refund are:

  • Those who itemize deductions.
  • Those whose 2022 state or local taxes fell under the $10,000 cap as a result of the MA tax refund they received.

The Massachusetts DOR said that the money it paid out does not need to be reported on MA state tax returns.

https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers

The refund was due to Massachusetts having a surplus of revenues in 2021 (the tax year ended in June of 2022).  MA taxpayers received a refund related to taxes paid.

Massachusetts Department of Revenue Chapter 62F Taxpayer Refunds

 

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