First, taxpayers who are eligible to exclude up to $10,200.The agency will do these recalculations in two phases. Any resulting overpayment of tax will be either refunded or applied to other taxes owed.
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For taxpayers who already have filed and figured their 2020 tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation. This law change occurred after some people filed their 2020 taxes. Information for people who already filed their 2020 tax return All other eligible taxpayers can exclude up to $10,200 from their income. People who are married filing jointly can exclude up to $20,400 – up to $10,200 for each spouse who received unemployment compensation. This means they don't have to pay tax on some of it. Under the new law, taxpayers who earned less than $150,000 in modified adjusted gross income can exclude some unemployment compensation from their income. These refunds are expected to begin in May and continue into the summer.
The IRS will automatically refund money to eligible people who filed their tax return reporting unemployment compensation before the recent changes made by the American Rescue Plan. However, a recent law change allows some recipients to not pay tax on some 2020 unemployment compensation. This article was originally published on, any unemployment compensation someone receives is taxable. “If you need human eyes or hands on your file, you will be delayed,” she says.Īshley Locke produced and edited this interview for broadcast with Tinku Ray. The best way to get your refund is to file electronically, use direct deposit, and make sure child tax credit and stimulus amounts match the notices you received from the IRS, she says. “The agency cannot help you in the way that you would like to be helped.” “Spend 23 minutes on the IRS.gov website, I bet you will find a lot more information,” she says. “And they say that’s amid a 19% increase in workload.”Ĭall volumes tripled in 2021 but the IRS could only answer 11% of them - and the average hold time was 23 minutes, she says.
“The IRS has seen budget cuts where they’ve had a staff reduction of about 17% over the last dozen years,” Schlesinger says. What does this mean for tax season?Īs the third pandemic tax season begins, there’s a lot of confusion at the IRS. “Most states actually do levy taxes on unemployment benefits but check with your state because a handful, about 10-15, don’t actually do that,” she says. Look for Form 1099 to find out what you received and check your state’s rules, she says. “If you did not withhold taxes from your unemployment payments, you might owe money or maybe just get a smaller refund this tax season,” Schlesinger says. But that’s not the case for the benefits collected in 2021. What do people who collected unemployment need to know about their tax filing?īack in 2020, the American Rescue Plan provided a waiver for federal taxes on up to $10,200 in unemployment benefits. “You’ll also probably get a separate letter from the IRS about that as well, so keep an eye on that,” she says. People who didn’t receive a payment need to file for Recovery Rebate Credit - line 30 on Form 1040 - on their tax return, Schlesinger says. Good news: Stimulus payments aren’t taxable. What about people who received stimulus payments? “And you may even find that if you didn’t get any advance payments last year, you may get a lump sum by claiming the child tax credit when you file this year.”
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“Go to IRS.gov Child Tax Care Update Portal,” she says. Check your snail mail for a 6419 letter from the IRS.
To claim the rest, file it on your tax return, Schlesinger says. Many people received the child tax credit in six installments last year but only got half the money. If you’re confused about the child tax credit, you’re not alone. What should families that received child tax credit money in 2021 keep in mind? Three tax seasons into the pandemic, the IRS is already dealing with a backlog of millions of returns because of staff shortages.īut don’t panic, CBS News business analyst and “Jill on Money” host Jill Schlesinger has tips for getting it all done.
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