IRS begins issuing unemployment tax refunds to some Americans
As many as 10M Americans overpaid their taxes, the IRS said
Biden wants 'stunning' new IRS powers to track US taxpayers money flow
FOX News contributor Sean Duffy reacts to Biden's proposed IRS powers and the potential ousting of Liz Cheney on 'The Evening Edit.'
The IRS began issuing refunds this week to Americans who overpaid taxes on unemployment benefits collected last year.
The $1.9 trillion coronavirus stimulus plan that President Biden signed into law in March, known as the American Rescue Plan, waives federal income taxes on up to $10,200 in 2020 unemployment insurance benefits for individuals who earn less than $150,000 a year.
IRS DELAYS IRA, HEALTH SAVINGS ACCOUNT CONTRIBUTION DEADLINE UNTIL MAY 17
As many as 10 million Americans overpaid their taxes, the IRS said. Many of these taxpayers are likely owed a refund from the IRS, because they presumably filed their returns before March 11, when Biden signed the stimulus bill into law. The IRS has advised individuals in this situation to not file another return and promised to automatically refund the money.
The agency said it will do the recalculation in two phases, beginning with individual taxpayers who are eligible for the $10,200 exclusion. It will then proceed to calculate the new refund for married couples who are eligible for the $20,400 exclusion and other more complex returns.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return," the agency said.
You're eligible for the tax refund if your household earned less than $150,000 last year, regardless of filing status. Workers can exclude the aid when calculating their modified adjusted gross income — meaning that an individual who earned $140,000 last year but collected $10,200 in jobless aid is still eligible to take advantage of the tax break.
The break applies to this tax-filing season, which began Feb. 12 and ended May 17.
However, some people with debts may have the refund seized by the federal government to cover unpaid child support or student loans, the IRS said. The agency noted the additional refunds "are subject to normal offset rules" and can be used to pay "past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or certain federal nontax debts (i.e., student loans)."
CLICK HERE TO READ MORE ON FOX BUSINESS
The federal government and most states count unemployment benefits, including the extra money distributed through federal aid programs, as taxable income. But unlike a typical paycheck, taxes aren't automatically deducted from jobless aid, creating a potential for refund shock for millions of out-of-work Americans even though they lost their job.
About 40 million people collected jobless aid last year, according to The Century Foundation. The average person received $14,000 in benefits.