Tax Tips: Will I have to pay state tax on my federal tax rebate check?

As everyone eagerly awaits their "economic stimulus" checks from the federal government, scheduled to begin mailing in May, there's a bit of bad news coming. Each state must decide whether or not they are going to tax the rebate check you get. There is no law prohibiting the states from considering it taxable, and some states surely will.

According to the blog Don't Mess With Taxes, Alabama has said they're taxing the rebate, while New York, Oregon, California, and Iowa have said they are not. Obviously, we've got a ton of other states that must still weigh in on the issue. But don't be surprised if your state decides to tax you... the politicians are always looking for an excuse to get further into your pockets!

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.