The IRS recently sent approximately 430,000 refunds totaling more than $510 million to taxpayers who paid taxes on unemployment compensation excluded from income for the tax year 2020.
Due to the $1.9 trillion American Rescue Plan Act, which became law in March, up to $10,200 in 2020 unemployment compensation was excluded from taxable income for individuals and married couples with modified adjusted gross income under $150,000 last year.
The agency identified 16 million taxpayers who may be eligible for an adjustment. For this round of refunds, the agency reviewed 519,000 returns and approximately 430,000 were eligible for a refund. The agency has so far issued more than 11.7 million refunds related to unemployment benefits, totaling over $14.4 billion.
Eligible filers whose tax returns have been processed will receive two refunds: The first reflects how they filed, and the second refund will reflect any tax break they get on their unemployment benefits. The IRS will issue refunds by direct deposit for taxpayers with valid banking information on their 2020 return. If that information is not available, a paper check will be sent instead.
The refunds are subject to normal offset rules, including past-due federal tax, state income tax, and state unemployment compensation debts, among others. If the refund is used to pay the unpaid debt, the IRS will send a separate notice.
The agency said, “The review of returns and processing corrections is nearly complete as the IRS already reviewed the simplest returns and is now concentrating on more complex returns.”
Another batch of corrected refunds is slated to go out sometime before the end of the year, though the federal agency did not provide a narrower time frame for when such payments will be distributed. Typically, the IRS sends out letters to impacted taxpayers within a month of the adjustment with details about the payment.
Most people won’t need to take any further action to get the money.
Sources: Fox2now, Ktla, Recentlyheard