On March 30, 2022, bipartisan legislation was introduced to make the PG&E payments non-taxable at the Federal level. This bill was just introduced and has a LONG way to go to get approved. Here is the Press Release from Mike Thompson’s office (CA-05).
There is similar legislation in the California legislature that would make the payments non-taxable for California purposes. See the story HERE. The California bill has been approved by the Assembly and is awaiting a Senate vote so this bill is much further down the road than the Federal one. Word on the street is that the State Senate will vote in May 2022 on this bill.
What should you do about your taxes?
- Many practitioners are having their clients file extensions for 2021 and paying the full amounts that could be due to the Feds and the State.
- Then once the legislation gets passed, the real return will be recalculated and filed and hopefully the client will be due a refund.