In early February 2022, during Governor Janet Mills' State of The State Address, she explained that she was planning to give part of that budget surplus back to the people of Maine.

Over the next few months, the plan to do that was released and then refined, several times.  In addition to the criteria (income maximums) for getting a check being determined, the amount of each check was refined.  As it became clear that there was more money in that surplus than initially thought, the amount of the check kept increasing.

In the end, each eligible Mainer got a check for $850!

The stated reason of the checks was to help those who were struggling financially.  Sadly, because of the inflation we have been experiencing for the last few years, most people ended up spending that money on paying for the necessities.  Of course, there were a few who were lucky enough to be able to spend the money on something fun - a road trip, down payment on a new vehicle, a bigger TV, etc.

Those who put some thought into the concept quickly realized that the checks weren't really a gift from the government.  As they were from a budget surplus, much of the money had most likely been obtained through taxation in the first place.  So, in a lot of people's minds, they were less of a gift and more of a tax refund.  As a result, there should be no taxes taken out of the $850.

Apparently, not everyone in the government feels the same way.  According to the KJ, the IRS is in the process of examining the situation to determine whether or not taxes will be taken out of the $850 checks.

If it is determined that the checks were meant to be used as relief checks, no taxes should be taken out.  If it is determined that money was intended for a different purpose, we could end up seeing the money taxed.  That's what the experts at the IRS are trying to figure out.

It should be noted that, according to a statement from the Governor's office, the money was meant to be used for relief.

The statement on the website says, in part:

Maine people are grappling with the increased costs as a result of pandemic-driven inflation, ranging from higher energy costs to increased prices of everyday goods. While the Governor cannot control the impact of COVID-19 on global markets, she can make sure that we deliver to Maine people the resources they need to deal with these higher costs. To help, Governor Mills proposed giving back more than half the budget surplus to the taxpayers of Maine, in the form of $850 direct checks.

So, what should you do?  If you have already filed the experts are suggesting you not amend your filing...  yet.  And, if you have not yet filed, you are going to want to wait until the IRS makes a determination.

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