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IRS IS SENDING UNEMPLOYMENT TAX REFUND CHECKS
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ncle Sam is issuing 2.8 million refunds to people eligible for the new $10,200 unemployment compensation tax exemption. More payments to follow. If you received unemployment benefits last year and filed your 2020 tax return relatively early, you may find a check in your mailbox soon (or a deposit in your bank account). The IRS started issuing automatic tax refunds last month to Americans who filed their 2020 return and reported unemployment compensation before tax law changes were made by the American Rescue Plan. As of June 4, the tax agency has sent more than 2.8 million refunds, and it announced that 2.8 million more payments will go out. After that, the next round of refunds will be sent in mid-June, with additional refund checks to be sent through the summer. The American Rescue Plan Act, which was enacted in March, exempts up to $10,200 of unemployment
benefits received in 2020 ($20,400 for married couples filing jointly) from federal income tax for households reporting an adjusted gross income (AGI) less than $150,000 on their 2020 tax return. The IRS has identified over 10 million people who filed their tax returns before the plan became law and is reviewing those returns to determine the correct amount of tax on their unemployment compensation. For those affected, this could result in a refund, a reduced tax bill, or no change at all. The IRS is recalculating impacted tax returns in two phases. It started with tax returns from single taxpayers who had relatively simple returns, such as those filed by people who didn't claim children as dependents or any refundable tax credits. The tax agency will then adjust returns for married couples filing jointly who are eligible for an exemption up to $20,400 and others with more complex returns.
Ryan Dodson has a Masters in Accounting from North Carolina State University. He worked in public accounting with Deloitte and Arthur Andersen. He and his wife Tiffany own and operate Liberty Tax Service. 405 East Dixie Drive•Asheboro, NC 27203 (336) 629-4700 12 | asheboromagazine.com
