The IRS identified over 10 million taxpayers who filed their tax returns prior to the American Rescue Plan becoming law and is reviewing those tax returns to determine the correct taxable amount of unemployment compensation and tax. Another 1.5 million refunds will be sent this week. Are you included?
Millions of Americans are receiving IRS refunds as a result of the tax exemption on the first $ 10,200 received as unemployment benefits in 2020. Will you receive the money this week?
The Internal Revenue Service informed on Wednesday that, as it continues to adjust unemployment compensation from previously filed income tax returns, another 1.5 million taxpayers will receive refunds averaging more than $1,600.
The American Rescue Plan Act of 2021, which became law in March, excludes up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
According to the IRS website, the fourth round of refunds by direct deposit began July 28, and refunds by paper check will begin July 30.
Since May, the IRS has issued over 8.7 million unemployment compensation refunds totaling over $10 billion and will continue to review and adjust tax returns in this category this summer.
For this round, the IRS identified approximately 1.7 million taxpayers due to an adjustment, and approximately 1.5 million of them are expected to receive an average refund of $1,686. The amount is higher for this round because the agency included an adjustment to the Advance Premium Tax Credit.
The IRS started with the simplest tax returns and is now reviewing more complex returns.
Most taxpayers need not take any action because IRS employees have reviewed and adjusted their tax returns for them and, for taxpayers who overpaid, the IRS will either refund the overpayment or apply it to other outstanding taxes or other federal or state debts owed.
There is no need to call the IRS to receive the money but, if due to the excluded unemployment compensation, taxpayers are now eligible for deductions or credits not claimed on the original return, they should file a Form 1040-X, Amended U.S. Individual Income Tax Return.