Quick update on this morning's email..............IRS just announced that it WILL NOT tax California residents on the refund checks. Good news! Your returns can be filed.
Now we're just waiting on Sacramento to weigh in on the below ERC issue for businesses.
If you are a California resident, or if your business is in California, this is for you................
CALIFORNIA RESIDENT............ IRS just advised that many of you should delay having your tax return filed. The advice is directed at anyone who received "Middle Income Tax Relief Payments" from California. If you received the payment, you would have also received a 1099 from the state, reporting the payment. Many of you have already sent me your tax information and included the 1099.
IRS says to delay because it has not yet decided on whether or not the payment is taxable. In the past, similar style tax rebates have been considered non taxable but in this case, IRS is taking a second look.
So for now,we're waiting for IRS to weigh in.
CALIFORNIA BUSINESS......... California has just advised any business that received an ERC refund from IRS to delay filing its business tax return. Although IRS has made it clear the refund is non taxable at the time you received it, California is now taking a second look and has yet to determine if the refund is taxable in California.
So for now, we're waiting for Sacramento to weigh in.
We've been here before during Covid, when we've all been asked to hold off on filing. Sacramento has not given an ETA on its decision, but given other similar issues during Covid, I would expect a decision within 30 days.