|Posted on March 31, 2021 at 4:05 PM|
I know there has been a lot of changes since the election and a great deal of confusion has come of the new Acts that passed on March 11, 2021. Here is something that a lot of Americans will find helpful in the coming months.
IRS to recalculate taxes on unemployment benefits; refunds to start in May
WASHINGTON – To help taxpayers, the Internal Revenue Service announced today 3/31/2021, that it will take steps to automatically refund money this spring and summer to people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan.
Taxpayers who earned less than $150,000 in modified adjusted gross income get to exclude unemployment compensation up to $20,400 if married filing jointly. All other elibible taxpayers get to exclude up to $10,200. The legislation excludes only 2020 unemployment benefits from taxes.
For those taxpayers who filed their taxes based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation and tax. Any overpayment of tax will be either refunded to you or applied to outstanding taxes owed.
There is no need to do an amended return, the IRS is aware of the issue. Should the adjustment affect other parts of your return that may require you to file an amended return, you will be notified.
The IRS has been working with tax software companies to update the systems but be patient, not all systems have been totally updated.
The new IRS guidance also includes details for those eligible taxpayers who have not yet filed.
Consider familiarizing yourself with these changes that may affect your return by clicking this link