The IRS sends 430,000 refunds for unemployment tax compensation – who will receive about $ 1,189?

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In its most recent press release, the Internal Revenue Service announced that it sent approximately 430,000 refunds to those who paid taxes on unemployment benefits which are now excluded for the 2020 tax year under the draft. stimulus law.

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The new provision, which falls under the 2021 US bailout, was enacted in March and excludes the first $ 10,200 in unemployment benefits per taxpayer in 2020. This amount is excluded from the calculation of adjusted gross income – this is no. is not the amount of the refund, the IRS pointed out. The exclusion applies to individuals and married couples whose adjusted gross income is less than $ 150,000.

The IRS estimates that the amount of refunds sent totals $ 510 million to taxpayers. The agency says efforts to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. The IRS has identified more than 16 million people who may be eligible for the adjustment. If you qualify, you will either receive a refund or the overpayment will be applied to taxes owed or other debts to the government.

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The $ 10,200 exclusion applies only to federal taxes. Most states don’t have their own tax on unemployment benefits, but each state has its own provisions, so it’s crucial to ensure that your state taxes them separately or not. The exclusion means the first $ 10,200 is not subject to federal income tax this year – anything over that amount, however, can still qualify as taxable income.

The IRS said the last batch of corrections resulted in refunds of around $ 1,189 on average.

The agency also said its review of returns and processing of corrections was nearing completion. If you are one of the affected taxpayers, you should receive a letter from the IRS within 30 days of the adjustment, informing you of the type of adjustment made and the amount to be received / deducted from other debts.

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The IRS is also making corrections for the amounts of the Earned Income Tax Credit, Additional Child Tax Credit, U.S. Opportunity Credit, Premium Tax Credit, and Refund Credit. recovery affected by exclusion. If you think you are falling under any of these corrections, the IRS says it is more than likely that you will not need to take any further action and the agency will take care of the correction automatically. .

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Last updated: November 2, 2021

About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private banking and investment research. Georgina has written for Investopedia and WallStreetMojo.

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