The IRS has sent delayed tax refunds to 12 million Americans who qualified for a tax discount on unemployment benefits received during the first year of the COVID-19 outbreak.
This Monday, the government said in a press statement that 14 million tax returns from the 2020 filing season were corrected. It distributed approximately $14.8 billion in rebates averaging $1,232 apiece.
Tax Refunds
The IRS stated in a statement that some taxpayers received refunds while others had overpayments applied to taxes owed or other debts. In certain instances, the exclusion resulted solely in a reduction of the individual’s adjusted gross income.
The fix resulted from the American Rescue Plan Act of 2021, which exempted persons earning less than $150,000 annually from federal income taxes on up to $10,200 in unemployment insurance benefits in 2020.
As the bill was not signed into law by President Joe Biden until March 2021, many Americans had already submitted their tax returns for the year.
According to the IRS, around 14 million tax forms were amended, but some overpayments were applied directly to taxes owed or other bills.
The affected taxpayers should get an email informing them of the changes. The IRS emphasizes maintaining the letter for tax purposes.
To collect the refund, qualified taxpayers who did not receive an IRS correction may need to file an amended 2020 tax return.
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IRS Information
In addition, the American Recovery and Reinvestment Act provided $1,400 in stimulus checks to the majority of qualified individuals and their dependents. Nonetheless, it accomplished much more. The American Recovery and Reinvestment Act does, in fact, contain a number of elements that help taxpayers.
One of the major components of the COVID-19 relief plan, the American Rescue Plan Act, which was signed into law by President Joe Biden in March 2021, was the exemption of certain unemployment benefits from taxation.
Specifically, if the pair filed their taxes as married filing jointly, up to $10,200 of jobless benefits received in 2020 would be exempt from taxation for each spouse.
After this evaluation, those who paid taxes on all of their 2020 unemployment benefits may be entitled to a refund from the IRS. Additionally, the IRS reported that it had repaired tax returns for other issues with the American Opportunity Tax Credit, other COVID-19 stimulus payments, and the Earned Income Tax Credit.
The IRS has identified the bulk of these issues and is currently automatically processing refunds. However, the IRS also emphasized in its news release that taxpayers who are eligible for the refund but whose forms were not amended must file a revised return for 2020 in order to get the refund.
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