Arizona Family Tax Rebate

Many Arizona families will receive a financial boost from the state government thanks to a new tax plan in the state budget. The one-time family rebate is intended to provide relief from high inflation.

Almost three-quarters of a million Arizona families could soon have extra cash in their pockets thanks to a tax rebate plan Republican lawmakers pushed into the state budget earlier this year. However, the Internal Revenue Service says they’ll need to report this Arizona Family Tax Rebate money as income when they file their federal returns later this year. The IRS’ decision surprised many people who received the rebate payments, which were capped at $750 for families. The agency told the Department of Revenue that the payments should be taxable, but it did not provide any written explanation until Feb. 15.

Mayes’ lawsuit argues the IRS’s determination was “arbitrary, capricious, inequitable and unlawful.” It also accuses the agency of violating the law by failing to give its reasons for the change. The Department of Revenue is working to identify eligible Arizona residents and will send them the rebates automatically based on their most recent tax information. Eligible residents will receive a 2024 Form 1099-MISC reporting the amount they received. They will need to enter this figure into TurboTax when they file their federal taxes.

Arizona Family Tax Rebate Requirements

Arizona Family Tax Rebate Requirements

The Arizona Families Tax Rebate is a state program that gives eligible taxpayers a check for $250 per dependent under 17 and $100 per dependency over 17, with a maximum payment of $750. The one-time rebate is part of this year’s state budget, and was championed by lawmakers from the Freedom Caucus. The federal government has decided that the rebate is taxable income, and is asking Arizona families to pay taxes on it. Attorney General Kris Mayes has sent a letter to the IRS Commissioner urging him to reverse this decision.

She argues that the rebate meets several criteria for exemption from federal taxation, including that it is provided through legislatively mandated social benefit programs that promote general welfare. She also points out that taxpayers in other states have received similar rebates and have not been taxed on them.

Republican state Senate President Warren Petersen echoed this sentiment in a press release, calling it “bizarre that the Biden administration would choose to hurt Arizona families with this unfair and misguided policy.” He has also written a letter to Werfel urging him to reconsider his decision.

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