N.y. State inflation rebate check

[fredr]

Is the N.Y. State Inflation rebate check taxable on the federal return? I know it’s not taxable on state return but am seeing conflicting reports on whether it’s taxable on federal return.

[TaxBandit]

I have burned so many brain cells on this topic this year (almost more than tips and OT!!!)  I personally will be adding it to the federal tax return as a 1099-G as NYS is generating the forms.  Most clients will not pay tax on it as they don't itemize.  My personal 2 cents.

Additionally, if it is included as income, make sure to subtract it from NYS with code S-217.

[fredr]

So if they didn’t itemize in the previous year it’s not taxable?

[TaxBandit · Accepted solution]

I am treating it as a tax refund - at least for now.  Awaiting guidance from IRS.

I am trying to keep a love note from the IRS arriving in client mailboxes in about 2 years.

Again, this is MY OPINION of how I am dealing with this.

[Terry53029]

It is not taxable to NY, but it may be taxable to federal depending on your 2024 taxes. If you took standard not taxable. if you itemized then it may be taxable (kinda like state income tax refund). that is Turbo Tax treatment, and Google AI. NY dept of revenue has not given an answer nor has IRS. I'm going with TT treatment

[fredr]

Thanks