4M to Receive Refunds Under Jobless Benefit Tax Break
About 4 million more people who overpaid their unemployment insurance taxes than they received last year are expected to get a refund from the IRS soon.
Direct deposit refunds will begin July 14 and paper check refunds will begin July 16, the IRS said Tuesday. The average refund is $ 1,265.
Refunds are for those who overpaid and filed their taxes before the American Rescue Plan was approved in early March, after the start of tax season.
The stimulus package allowed taxpayers to exclude up to $ 10,200 of unemployment benefits in taxable income for individuals and couples with less than $ 150,000 in modified adjusted gross income. Instead of having people file changes to their tax returns to claim the exclusion, the IRS said it would do the heavy lifting for them.
Unemployment claims spiked last year after restrictions aimed at slowing the spread of COVID-19 closed or slashed many businesses. For the first time, the self-employed also benefited from unemployment benefits.
In May, the IRS said it was working on these returns in phases, starting with the simplest individual tax returns and issuing refunds over the summer. He said that if a taxpayer owed any adjustment money, they would refund the overpayment or apply it to other outstanding taxes or other federal or state debt owed. In June, it sent out more than 2.8 million refunds.
Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, stating what type of adjustment was made and the amount of the adjustment.
The IRS cautioned that if the income adjustment now makes taxpayers eligible for unclaimed deductions or credits on the original return, they must file an amendment to claim them. These deductions and credits may include Additional Child Tax Credit or Earned Income Tax Credit.
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Source: Logan Allec
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