IRS Commissioner Charles Rettig had previously urged taxpayers who qualify for the exclusion not to file an amended return to claim it.
The IRS is first recalculating the exclusion for single taxpayers, who are eligible to exclude up to $10,200 of benefits collected in 2020, then move on to married taxpayers who file jointly and are eligible for an exclusion of up to $20,400 and to others with complex returns. Taxpayers who did not include bank information on their tax return will get paper checks. Most payments will be automatically direct deposited. Refunds deemed necessary will be issued in two phases, starting in May and continuing throughout the summer. The IRS announced on March 31 that it would indeed review submitted tax returns in phases to ensure taxpayers receive the tax break if they qualify. Millions of people who had already filed and reported unemployment compensation were left wondering whether they'd missed out on the exclusion. The tax break was a welcome relief - but it cropped up in the middle of tax season.
All filers need to have modified adjusted gross income below $150,000 to qualify. (The relief doesn't apply to benefits you're getting in 2021.) That unemployment tax break doubles for married couples who file taxes jointly. This could result in a refund, a reduced balance due or no change to tax (no refund due nor amount owed)," the IRS said.Ī $1.9 trillion economic relief package included a new tax exclusion on the first $10,200 of unemployment benefits collected in 2020. "The IRS identified over 10 million taxpayers who filed their tax returns prior to the American Rescue Plan of 2021 becoming law in March and is reviewing those tax returns to determine the correct taxable amount of unemployment compensation and tax. The Internal Revenue Service announced Friday that it will begin issuing automatic refunds this week to some people who collected unemployment in 2020 but missed a valuable tax break. Next will be married filing joint filers who are eligible for the up to $20,400 exclusion and people with “more complex” returns.By clicking ‘Sign up’, you agree to receive marketing emails from InsiderĪs well as other partner offers and accept our First up will be people eligible for the up to $10,200 break. The recalculations will occur in two phases. IRS advises that for those who already filed returns, it will figure the proper amount of unemployment compensation and tax. The IRS said it will “take steps in the spring and summer to make the appropriate change to their return, which may result in a refund.” First refunds are expected in May and probably continue during the summer. The IRS announced this week it will “take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan.”Ī. I filed my 2020 tax return before the $10,200 benefit was created. If you both received $10,200, for instance, and qualify for the break, you can subtract $20,400 from your taxable income, assuming your modified adjusted gross income is less than $150,000. Both my spouse and I received unemployment benefits last year.
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