‘Surprise’ Tax Refunds Worth 1.5 Million Will Be Sent Out By IRS This Week
Taxpayers will receive another 1.5 million refunds averaging more than $1,600, the Internal Revenue Service announced on Wednesday.
This is a result of adjustments made to previously filed income tax returns for unemployment compensation.
“The American Rescue Plan Act of 2021, which became law in March, excludes up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000,” the IRS stated.
The direct deposit refund period begins July 28 and the paper check refund period begins July 30, Wabcradio reported.
In response to the unemployment compensation exclusion provision, this is the fourth round of refunds.
#IRS is issuing refunds for taxes paid on 2020 unemployment compensation excluded from income. The first adjustments are for single taxpayers who had the simplest tax returns. Details at https://t.co/hcqbFq5oZe pic.twitter.com/NfDf20SCsD
— IRSnews (@IRSnews) July 30, 2021
Over $8.7 million unemployment compensation funds have been issued by the Internal Revenue Service since May – totaling over 10 billion dollars.
An estimated 1.7 million taxpayers are due an adjustment for this round.
A refund is expected for roughly 1.5 million of those taxpayers.
On average, they will receive $1,686 in refunds.
The IRS does not need to be contacted by most taxpayers or take any action.
Taxpayers with deductions or credits not claimed on the original return may now be eligible for them as a result of the exclusion of unemployment compensation which requires them to file Form 1040-X, Amended U.S. Individual Income Tax Return.
An amended return should be filed by taxpayers if they:
- had not filed Schedule 8812 with their original return to obtain the Additional Child Tax Credit and are now eligible to claim it due to the unemployment compensation exclusion;
- did not include the Earned Income Tax Credit Schedule with their original tax return and now qualify for the credit after being excluded from unemployment benefits;
- are now eligible for any other deductions and/or credits that are not listed below. Don’t forget to include any schedules or forms required.
An amended return is not required if:
- already filed a tax return without claiming unemployment exclusion; the IRS will calculate the correct unemployment tax and compensation;
- have an adjustment, due to the exclusion, resulting in a higher amount of the credit reported on the original return;
- have not claimed the following credits on their tax returns, but now qualify for the following credits: Recovery Rebate Credit, Earned Income Credit with no qualifying dependents, or the Advance Premium Tax Credit.
- submitted a married filing joint return, reside in a state with community property and entered a lower exclusion amount than required on Schedule 1, line 8.
An IRS letter informing the taxpayer of the type of adjustment, necessary amount and account, is generally sent to them within 30 days after adjustments are made (such as refunds, payment of IRS debts, or payment offsets for other authorized debts).