Missouri Might Tax Stimulus Payments
As the saying goes if it's too good to be true it probably is. Like for example when the St. Joseph News-Press reported that the Internal Revenue Service said people wouldn't be responsible for taxes on their stimulus payment because it's not income. That's true on the federal level. However, according to the News-Press you could be liable for taxes on your stimulus payment.
The St. Joseph News-Press says the way the Missouri tax system is structured if your federal tax liability goes down, your state tax liability goes up. Since the IRS is treating the stimulus as a tax credit, most people's federal tax liability will go down. In turn, their Missouri tax liability would increase. According to the paper, the cost would be about $65 for $1,200 in stimulus payments.
That said, Missouri politicians don't want this to happen with our stimulus payments. The News-Press reports that State Senator Tony Luetkemeyer has attached an amendment to another tax bill already making its way through the Missouri Legislature that would prevent residents from having that happen. Governor Parson also told the paper that taxes on stimulus payments isn't something Missouri residents should need to worry about during this time.
I think there's a good chance we won't be giving the State of Missouri any taxes based on our stimulus payments. It seems the politicians don't want it taxed. And Anne Marie Moy, the communications director for the Missouri Department of Revenue, told the paper that the IRS will have some say in how states treat stimulus payments in terms of income tax purposes. So even if legislation doesn't happen, I'm left with the impression the IRS could tell the states they can't tax that.
I'm no tax expert either, but the thing that I'm still left scratching my head about is: Why would my Missouri taxes increase if my Federal taxes decrease? I mean wouldn't that indicate I made less money overall? Then again, you'd think if I'm overpaying on my federal taxes, I'd be overpaying on my state taxes. Of course I'm writing the State of Missouri a check this year. And probably will next year too.