Wrongly paid taxes on unemployment compensation? You might be one of the recipients of a recent IRS refund.
The Internal Revenue Service (IRS) has just sent out an estimated 430,000 tax refunds to people who wrongly paid taxes on unemployment compensation for the tax year of 2020.
Read more: IRS Released New Income Tax Bracket for 2022. How Will This Affect You?
These unemployment benefits were excluded from income tax in 2020, as part of the American Rescue Plan. The program was rolled out in response to the coronavirus pandemic.
However, many still paid tax on this, and they’re now due a refund.
Those who are eligible for a tax refund this November should receive a letter from the IRS within 30 days of the adjustment being made. These letters will explain exactly what kind of tax correction has been applied and how much they should receive.
Read more: IRS Plans Biggest CrackDown on Digital Payments: Will You Get Affected?
Some will receive straight cash refunds, while those who already owe money to the IRS will have those debts cut.
This tax refund is for those who overpaid taxes on unemployment compensation for the tax year of 2020. Because of the American Rescue Plan, no taxes were due on the first 10,200 dollars of unemployment compensation for that year.
Earlier in 2021, the IRS started checking all tax returns for the previous tax year to identify mistakes, whether overpayments or underpayments.
Read more: IRS Issues 430,000 Refunds for Adjustments Related to Unemployment Compensation
In the cases where these overpayments have been identified, the tax refunds are organized automatically and letters will be sent out.
The IRS is also reportedly checking and making corrections for earned income tax credit, additional child tax credit, American opportunity credit, premium tax credit and affected recovery rebate credit amounts.
Keep up with the latest here with us at the East County Gazette.
