Those who received a tax rebate from the Arizona government in 2023 will have to pay federal taxes on the money.
Qualifying Arizona families received a tax rebate starting on Oct. 30, 2023, with $250 for each dependent under 17 and $100 each for dependent adults, but the total went no higher than $750 for any family, The Center Square reported at the time.
Now, the Internal Revenue Service is hoping to tax the rebate itself.
Arizona lawmakers such as Senate President Warren Petersen are not pleased with the decision.
"It makes zero sense that the IRS is choosing to hurt Arizona families by taxing a tax rebate," he said in a statement last week. "I'm thankful for the help from Senator Sinema's office in working to get this matter front and center with the IRS and U.S. Treasury. With tax season less than two weeks away, time is of the essence."
Petersen, a Republican, thanked Attorney General Kris Mayes' office for communicating on the situation. There are an estimated 700,000 families who received the rebate, according to a news release.
"While litigation likely isn't the best approach, I appreciate the Attorney General's office reaching out to us on this matter. I am, however, incredibly disappointed our Governor is again nowhere to be found on an issue that could ultimately cost our citizens tens of millions of dollars. I'm calling on her to not turn a blind eye on this issue, as she did with gas prices last spring, and to work with us on solving this problem for Arizona families."
The Arizona Department of Revenue explained on its website that the 1099-MISC form will be available on Jan. 31.
"The Internal Revenue Service has determined that the rebate is subject to federal income tax and, thus, requires it to be reported as part of the federal adjusted gross income on the 2023 federal income tax return," the website states.
The department emphasized that this is separate from state taxes, and people only include it as federal income.
