IRS says state tax rebates can be reported on short form

Friday, March 3rd 2006, 3:40 pm
By: News On 6

OKLAHOMA CITY (AP) _ The Internal Revenue Service said Friday Oklahoma taxpayers will be allowed to report their state rebates on the simplest federal tax return forms.

The $45 rebates given to individuals and $90 for couples are taxable. IRS officials previously said there was nowhere on the simple Forms 1040A or 1040EZ to report this type of income, meaning they would have to file the longer Form 1040, which is generally avoided by taxpayers with simple returns and is used by taxpayers with complicated sources of income and deductions.

``Although this procedural change comes after many have already filed their tax returns, about 60 percent of taxpayers still have yet to file,'' says IRS spokesman David Stell. ``We wanted to do what we could, as soon as it was possible, to make the process easier for those still working on their taxes.''

Those filing short forms can list the rebate on the line normally designated for reporting unemployment compensation, which is line three on the 1040EZ form and line 13 on the 1040A form. No special identification or notation needs to be written on either form.

Taxpayers who also received unemployment compensation during 2005 should add the amount of the rebate to the amount of unemployment compensation received.

Taxpayers using Form 1040 should report the amount of the rebate under ``other income'' on line 21.