Wednesday, June 29

IRS: No tax return to get $ 10,200 unemployment exemption under Biden plan


One of the IRS tax return forms.

Foto:
Joe Raedle / Getty Images

The Internal Revenue Service (IRS) clarified that people who have already filed taxes do not need to file an amendment (amended return) to benefit from the new $ 10,200 exemption for unemployment funds.

“If you have already filed your 2020 Form 1040 or 1040-SR, no need to file an amended return (Form 1040-X) to calculate the amount of tax-exempt unemployment compensation, ”the agency said in a press release. “The IRS will recalculate your taxes using the excluded unemployment compensation amount and adjust your account accordingly,” the agency explained.

IRS Form 1099-G shows how much you received in unemployment compensation and other government payments in a given year.

Currently, the agency makes corrections to millions of tax returns from Americans eligible for the exemption to return eligible taxpayers what they overpaid in unemployment taxes.

$ 10,200 exemption was approved under the Biden Administration’s “American Bailout Plan”

The refunds are the result of the approval of the Biden Administration’s “American Rescue Plan” that also included the stimulus checks of $ 1,400 and the extension of the “Child Tax Credit” (CTC) that will begin to be distributed in monthly payments from July 15.

Under the new law, taxpayers who earned less than $ 150,000 in modified adjusted gross income can exclude part of unemployment compensation of your income. This means that they do not have to pay taxes on that part. For married people filing jointly, they can exclude up to $ 20,400 or up to $ 10,200 for each spouse who received unemployment compensation. All other eligible taxpayers can exclude up to $ 10,200 from their income.

Unemployment insurance funds someone receives are taxable. But, due to the recent change in the law, some beneficiaries will not pay taxes on part of their 2020 unemployment compensation.

This money has already begun to be sent to beneficiaries, as confirmed by the agency on May 14 in another press entry.

Sending a refund for unemployment tax payments will be made in two phases

The process, which will be carried out in two phases, will last until the end of the summer. The IRS will focus first on the individual returns that are easier to process. Next, you will correct the more complex returns or those of couples claiming dependents and tax credits.

Within 30 days of submitting the refund, the IRS will send the taxpayer a notice explaining the adjustments that resulted in the application of the exemption. Taxpayers should keep this notice for their records. Taxpayers who receive refunds should review their return after receiving their notice from the IRS, ”the agency said.

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