If you got a SC tax rebate, do you owe federal taxes on it? Here’s what the IRS says
.jpg "An image of cash.")
Many South Carolinians who got a state tax rebate can breathe a bit easier now.
The IRS clarified on Friday that those who received the rebate would not have to report it on their tax returns, if they meet certain requirements. The announcement comes days after the IRS told recipients of tax rebates to hold off on filing their returns until the agency could determine if they were subject to federal taxes.
According to the IRS, South Carolinians who have received the state tax rebate don’t have to report it for federal tax purposes “if the payment is a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit.”
In other words, the rebate can be excluded from income for federal tax purposes unless the recipient received a tax benefit in the year the taxes were deducted.
South Carolinians were among millions of Americans from multiple states who received some type of tax rebate check last year — mostly to offer relief from economic hardship, including inflation. The IRS has been working to clarify in recent days whether those rebates should be taxed on the federal level.
The South Carolina Department of Revenue has already stated that the tax rebate would not be taxed by the state.
According to the Tax Foundation, South Carolina was one of 11 states that issued similar rebates to eligible taxpayers last year. The other states include California, Colorado, Delaware, Georgia, Hawaii, Idaho, Illinois, Maine, New Mexico and Virginia.
South Carolina lawmakers in June approved the parameters for a tax rebate of $1 billion for South Carolinians. Eligible taxpayers have received up to $800 by direct deposit or paper checks.
Nearly all of the $1 billion has been distributed. However, there are some eligible taxpayers who filed or will file their 2021 tax returns between Oct. 18 and Feb. 15 and will get their rebates in March, the SCDOR states.
