Refunds coming to over 2.8 million who overpaid unemployment money, says IRS

National

WASHINGTON, DC – APRIL 15: The Internal Revenue Service (IRS) building stands on April 15, 2019 in Washington, DC. April 15 is the deadline in the United States for residents to file their income tax returns. (Photo by Zach Gibson/Getty Images)

(ABC4) – Over 2.8 million refunds are being sent to taxpayers who already paid taxes on unemployment compensation now excluded as income under new legislation, according to the Internal Revenue Service.

Get Utah’s latest news sent to your inbox! Click here to subscribe to the free ABC4 daily newsletter.

This effort to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. The IRS reports 13 million taxpayers have been identified as individuals who may be eligible for the adjustment.

Some will receive refunds, issued periodically, and others will have the overpayment applied to taxes due or other debts. For some, the IRS says there will be no change.

The American Rescue Plan Act of 2021 excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020. That is the maximum amount that can be excluded when calculating taxable income, it is not the amount of refunds.

In early June, the IRS began its programming review of tax returns filed before the enactment of the legislation to identify the excludible unemployment compensation. Corrections are being made for the Earned Income Tax Credit, Premium Tax Credit, and Recovery Rebate Credit affected by the exclusion.

If you have qualifying children and become eligible for the Earned Income Tax Credit after the exclusion is calculated, you may have to file an amended return to claim any new benefits, according to the IRS.

For those who are single with no children and who become eligible for the Earned Income Tax Credit, the IRS can adjust tax returns. The IRS can also adjust tax returns where EITC was claimed and qualifying children identified.

So far, the IRS reports it has reviewed over 3.1 million returns with more than 2.8 million receiving refunds.

The next set of refunds are expected to be issued in mid-June with the review of returns and processing of corrections will continue during the summer.

Taxpayers will receive letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made – like a refund, payment of IRS debt payment, or payment offset for other authorized debts – and the amount of the adjustment.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Utah Coronavirus

More Coronavirus Updates

IN FOCUS

More In Focus

Justice Files

More Justice Files