IRS Sends 430,000 Refunds for Unemployment Tax Compensation

IRS Sends 430,000 Refunds for Unemployment Tax Compensation

Georgina Tzanetos   Tue, November 2, 2021

Who Will Receive Roughly $1,189?

In its most recent press release, the Internal Revenue Service announced it sent approximately 430,000 refunds to those who paid taxes on unemployment compensation that is now excluded for the income tax year 2020 under the stimulus relief bill.  The new provision, which falls under the American Rescue Plan of 2021, was signed into law in March and excludes the first $10,200 in unemployment compensation per taxpayer in 2020.

This amount is excluded when calculating one’s adjusted gross income — it is not the amount of the refund, the IRS stressed. The exclusion is available to individuals and married couples whose modified adjusted gross income is less than $150,000.

The IRS estimates that the amount of the refunds sent out totals $510 million to taxpayers. The agency states that the effort to correct unemployment compensation overpayments will help most of the affected taxpayers to avoid filing an amended tax return.

The IRS has identified over 16 million people who may be eligible for the adjustment. If you are eligible, you will either receive a refund, or have the overpayment applied to taxes due or other debts to the government.

The $10,200 exclusion applies only to federal taxes. Most states do not apply their own tax on unemployment benefits, but each state has their own provisions, so it’s crucial to make sure whether or not your state taxes them separately. The exclusion means that the first $10,200 is not subject to federal income tax this year — anything above that amount, however, can still be qualified as taxable income.

The IRS said that the latest batch of corrections resulted in refunds averaging about $1,189.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/irs-sends-430-000-refunds-205815644.html