Illinois Income Tax Rebate and Property Tax Rebate (Public Act 102-0700) Do these have to be listed for 2022 taxes?

[eaglei22]

Last year in Illinois the state sent out a tax rebate to everyone as listed in the title. I haven't received any forms from the state (yet) but do I need to list this information anywhere in the 2022 TurboTax software? It never mentioned or asked anything about it. Thanks!

[tagteam]

Check back later. I will page Champs @Mike9241  and @TomD8 

[TomD8 · Accepted solution]

The Illinois Property Tax and Income Tax Rebates are not taxable by Illinois and do not have to be reported on your Illinois tax return.

However, if you itemized deductions on your 2021federal return and took a deduction for state income & property taxes, the rebates may have an effect on your federal return.

https://tax.illinois.gov/programs/rebates.html

[DMarkM1 · Accepted solution]

It depends. As @TomD8 states, if you did not itemize on your federal return for 2021, you do not need to enter the amount on your federal return.  

However, if you itemized last year and therefore claimed a deduction for state/local taxes you would enter the amount on your federal return as a refund of state/local taxes and it may be taxable.  

You may get a form 1099G showing the amount but even if you didn't you would still enter the amount in the same place in TurboTax.  In the "Wages and Income" section scroll down to "Other Common Income."  In that topic you will find the "Refunds from State/Local returns" interview.  

[Mike9241]

even if you itemized the refund may not be taxable for Federal purposes if your schedule A taxes exceeded $10,000. the deduction itself would have been limited to the $10K

see IRS PUB 525 worksheet 2

https://www.irs.gov/pub/irs-pdf/p525.pdf 

[eaglei22]

Perfect, thanks everyone for the help!

[friesfam1]

I don’t think that you answered the question.  Illinois issued rebates in September 2022 as rebates to taxpayers who paid Illinois income tax in 2021 and/or property taxes for 2021.  A taxpayer would not have known about these rebates when filing the 2021 fed return.  The question is asking whether to include these rebates in 2022 fed income.  Since the state called these payments rebates not refunds the feds could claim that they should be income if the taxpayer deducted those taxes on his 2021 federal return and should be income even if they did not.  The state has not expressed any opinion on this – it says to ask the IRS.  As you know that is impossible.  The amount of the income tax rebate has nothing to do with the amount of income taxes you paid to the state (and deducted on the federal return) and the property tax rebate is loosely based on the property tax you paid (and deducted).

The taxpayer cannot record this in the state tax refund screen because the related Turbo-Tax questions assume that it is a refund of prior year state income taxes.  But if you include anywhere else in Turbo-Tax then where would you remove it so as not to pay taxes on those rebates?  And maybe the taxpayer should pay taxes on those rebates.

I have no answer.  But that is the issue here.

[BrittanyS]

It depends; if you do not itemize on your federal income tax return, then no, the rebate will not affect your return.  The Illinois individual income tax rebate and property tax rebate are not subject to Illinois income tax.  

However, if you itemize on your federal income tax return, then the rebate may affect your 2022 return.  If you do receive a 1099-G, you will enter the form in TurboTax by following these steps:

1. Click Wage and Income
2. Click show more under Other Common Income
3. Click Start under 1099-G
4. Answer interview questions

[poppyd]

This is not correct.  The Income Tax Rebate and Property Tax Rebate are not "other income" as specified in TurboTax.

[wittth]

The IRS has clarified that it will not challenge the treatment of Illinois' property tax rebate as excludable for federal income tax purposes in 2022.  See https://www.irs.gov/newsroom/irs-issues-guidance-on-state-tax-payments-to-help-taxpayers#footnote2