IRS to process refunds automatically
IRS headquarters in Washington, DC
Samuel Corum / Bloomberg via Getty Images
The IRS plans to automatically process refunds for taxpayers who had unemployment income in 2020 and file their tax returns before laws were passed making those benefits tax-free.
The American bailout plan, signed by President Joe Biden on March 11, provided for the first $ 10,200 in unemployment income tax-free in 2020 for people with an adjusted gross income of less than $ 150,000. (The break is $ 20,400 for two workers in a married couple filing taxes together.)
By the time the law was passed in the middle of the tax season, some individuals who had received unemployment income in 2020 had already filed and paid taxes on these benefits.
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The IRS is working on a solution that means most people don’t need to take any additional steps in this situation, such as: B. sending an amended tax return to recoup the taxes you paid but not owe it according to the new rule.
“Do not file an amended statement at this point,” said IRS Commissioner Charles Rettig during a hearing on Thursday at the House Ways and Means Committee.
“We think we can do it on our own,” he said. “We believe we can automatically issue refunds related to the $ 10,200.”
Rettig said the IRS would release more details in the coming days.
New tax return instructions
Individuals who had unemployment income in 2020 and have not yet filed their tax returns may have to wait to make sure they are correctly submitting all of the information to the IRS.
The agency released new instructions on Friday, including a paper folder worksheet, and said it would work with online control programs to update the current software.
Taxpayers have additional time this year to sort and file their taxes. The IRS recently moved the deadline for filing taxes for individual taxpayers to May 17th from April 15th.
However, this extension only applies to individual returns and does not apply to estimated tax payments or corporate taxes that are due April 15th.
Rettig said the deadline was postponed for individuals only to help the most vulnerable taxpayers during a complicated tax season. He also said that future tax return season extensions may not become a pattern.
According to the agency, the IRS had received more than 66 million tax returns as of March 13, a decrease of 13.3% from the same period last year. To date, 42.5 million refunds have been sent to taxpayers, a 28% decrease from 2020.
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