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If you live in Colorado, the Internal Revenue Service (IRS) is asking you to hold off on filing your taxes this year. Officials are still trying to determine if refund or rebate payments distributed to millions of taxpayers in several states should be considered taxable income.
Eighteen states sent out relief payments to eligible taxpayers to help mitigate the effects of record-high inflation and soaring gas prices. Those states include Arkansas, California, Colorado, Connecticut, Delaware, Georgia, Hawaii, Idaho, Illinois, Indiana, Maine, Massachusetts, New Mexico, New York, Oregon, Rhode Island, South Carolina, and Virginia.
Gov. Jared Polis signed a law on May 23, 2022, giving Coloradans a tax rebate of $750 for individual filers and $1,500 for joint filers. According to the Colorado Department of Revenue, this money isn't taxable, but it doesn't clarify if that applies on the federal level, too. Residents also receive TABOR checks annually, which haven't been taxed by the IRS for the last 30 years.
Every state's guidelines and rules for these payments vary, complicating the process for the IRS. The agency plans to address the matter by issuing updated guidance next week.
What about people who already filed their taxes? The IRS said you don't have to file an amended return right now and to wait for further instructions.