Twelve million Americans who obtained jobless benefits during the first year of the COVID-19 outbreak will receive their long-delayed tax returns from the Internal Revenue Service (IRS).
On Monday, the government announced in a press release that 14 million tax returns from the filing season of 2020 had been amended. It distributed around $14.8 billion in average rebates of $1,232.
Who Already Received Tax Refunds In 2023?
Some taxpayers received refunds, while others had overpayments applied to taxes owing or other bills, according to an IRS statement. In other situations, the exclusion reduced the individual’s adjusted gross income.
The change was made possible by the American Rescue Plan Act of 2021, which exempted individuals earning less than $150,000 per year from federal income taxes on up to $10,200 in unemployment insurance benefits in 2020.
In 2020, the IRS also made adjustments to the earned income tax credit, recovery rebate tax credit, additional child tax credit, premium tax credit, and advanced tax credit.
Read more: Fair Tax: Republican-led House votes to abolish IRS
What Is 7% Interest From IRS?
The Internal Revenue Service normally pays interest on returns filed more than 45 days after the due date, according to its website.
Each quarter, interest rates are adjusted based on the federal short-term rate. The interest rate is currently 6%, but it will rise to 7% on January 1st. The interest rate was 3% a year ago, in contrast.
About 3.7 million individual tax returns were received by the IRS as of mid-November, of which 1.7 million required error repair or another special handling. An additional 2 million paper forms were still awaiting review and processing.
According to the U.S. Government Accountability Office, IRS interest payments increased by 33% in the fiscal year 2021, totaling close to $3.3 billion for individual returns.
A total of 17 million taxpayers sent paper submissions last year, adding to the backlog of returns despite the IRS’s requirement that more than 90% of taxpayers complete their forms online. The majority of older Americans who submit their taxes by mail are in this category.
Read more: IRS: 12 million Tax refunds for delayed 2020 tax season