The IRS said the first refunds are expected to be made in May and will continue into the summer
The IRS plans to automatically refund money this spring and summer to people who filed their returns and reported unemployment compensation before passage of tax law changes in the American Rescue Plan.
The legislation, signed on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude unemployment compensation up to $20,400 if married filing jointly and $10,200 for all other eligible taxpayers. The legislation excludes only 2020 unemployment benefits from taxes.
At the state level, legislation remains on Gov. Charlie Baker’s desk that would exempt a portion of unemployment benefits for qualifying taxpayers from state income taxes, and the Department of Revenue is current advising taxpayers with unemployment income to consider waiting until the bill is acted on before filing their returns.
The IRS announced Wednesday that affected taxpayers do not need to file an amended return unless the calculations make them newly eligible for additional federal credits and deductions not already included on the original tax return.
The IRS said the first refunds are expected to be made in May and will continue into the summer. The agency plans to determine the correct taxable amount of unemployment compensation and taxes for people who have already filed, refunding any overpayments or applying them to other outstanding taxes owed.
The IRS plans to start with returns filed by taxpayers eligible for the maximum $10,200 exclusion, before adjusting returns for those married filing jointly who are eligible for up to $20,400 in deductions and then others with more complex returns.
Federal data suggests over 23 million U.S. workers nationwide filed for unemployment last year, though it’s unclear how many filed tax returns to date.
Leave a Reply