IRS to send 4 million refunds this week to people who wrongly paid taxes on unemployment benefits
Americans who received unemployment benefits after pandemic businesses closed last year are finally starting to get the tax break they were promised when the US bailout was enacted in March.
The stimulus package allows them, if they are part of a household that earns less than $ 150,000 in gross annual income, to exclude up to $ 10,200 in unemployment benefits from their taxable income.
Without the US bailout, the unemployed would have had to pay taxes on up to $ 24,000 in benefits received in 2020, according to earlier estimates by Michele Evermore, senior unemployment insurance adviser at the US Department of Labor.
The exclusion could reduce a household’s tax bill by around $ 1,000 to $ 2,000, according to some tax experts.
But because the $ 1.9 trillion stimulus package was passed a month before the usual April 15 deadline for filing taxes, some 13 million unemployed Americans who filed their taxes early ended up overpaying. , according to the Internal Revenue Service.
In total, some 40 million people received unemployment benefits last year, according to a study published by the Century Foundation, a progressive think tank.
Last month, the IRS issued 2.8 million refunds by direct deposit or paper check, or applied the refunds to other unpaid obligations the individual may have. This week, the IRS announced it would issue an additional 4 million refunds for an average of $ 1,265 per payment.
“Most taxpayers don’t need to take any action and you don’t need to call the IRS,” an IRS statement said. But if you qualify for more deductions or tax credits with your new adjusted gross income figure, you must file a Form 1040-X, Amended U.S. Personal Income Tax Return.
You can check the status of your refund using the IRS ‘ Check the status of my refund tool.