Photo: ADEK BERRY / AFP / Getty Images
The Internal Revenue Service (IRS) announced on Friday the sending of 2.8 million refunds to taxpayers who overpaid taxes for unemployment benefits under the $ 10,200 tax exemption contained in the “Economic Rescue Plan” of the Biden Administration.
In the middle of last month, the IRS reported that started the process of correction of tax returns to establish the amount to be returned to Americans eligible for the tax exemption.
Although, initially, the agency estimated more than 10 million people who could receive the reimbursement, in yesterday’s statement it indicated that it identified some 13 million taxpayers who may be eligible for the adjustment.
“To date, the IRS has reviewed more than 3.1 million returns and more than 2.8 million have received refunds,” the IRS said.
New shipment of refunds will be in mid-June
After this batch of shipments, the IRS has set out to release the next one in the middle of this month.
Under the “American Bailout Plan” (ARPA) approved in the US Congress last March, people who received unemployment insurance funds in 2020 can exclude up to $ 10,200 in compensation. “The $ 10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds ”, clarified the agency.
The tax exemption applies to who earned less than $ 150,000 in adjusted gross income.
“You are eligible for exclude unemployment compensation if you received it in 2020 and your modified adjusted gross income (AGI) is less than $ 150,000. The AGI modified for the purpose of qualifying for this exclusion is your 2020 adjusted gross income minus the total unemployment compensation you received. This limit remains the same for all tax states, regardless of whether you are married and filing a joint tax return (it does not double to $ 300,000), ”the IRS explained in a previous post on its website.
The IRS expects to send most payments by direct deposit.
Refund money could be redirected to outstanding debts
In most cases, corrections to returns will translate into money for taxpayers.
However, in cases where individuals have outstanding debts with the IRS or other entities, the overpayment will be applied for the exemption to these tax obligations.
Although most beneficiaries will receive a refund automatically, in some cases taxpayers will have to submit an amended tax return to the agency. whether they are eligible for certain credits such as the Earned Income Tax Credit (EITC).
“Taxpayers Who Have Qualifying Children Who Become EITC Eligible after the exclusion is calculated they may have to file an amended return to claim new benefits. The IRS can adjust tax returns for those who are single with no children and who are eligible for the EITC. The IRS can also adjust the tax returns in which the EITC was claimed and the qualifying children were identified, ”the entity said.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.