Check Here for Latest COVID-19 Related Tax Updates

phone: 978.774.3000    fax: 978.774.8170    185 Centre St., Danvers, MA 01923

Taxpayers May Receive a Refund for Taxes Paid on 2020 Unemployment Compensation

The IRS is currently reviewing tax returns that were filed before the American Rescue Plan of 2021 became law back in March. This plan excludes up to $10,200 in unemployment compensation from taxable income if you qualify. You qualify for this exclusion if your modified adjusted gross income is less than $150,000 (this threshold amount applies to all filing statuses). So essentially what happened was that a person, who received unemployment in 2020, filed their taxes before the American Rescue Plan was signed into law, so the person didn’t get the $10,200 exclusion because it didn’t exist at the time of filing. The IRS is saying not to amend your return because they will review it and if you qualify for the exclusion, they will calculate and send out your refund.

The IRS is also working on making corrections for the earned income tax credit, premium tax credit, and recovery rebate credit.

If the IRS does adjust your tax return, you will receive a letter within 30 days with an explanation of the change(s) that was made.

If your return gets changed and you receive a letter, you should save it and make sure to give a copy of it to your accountant.

The information provided in this blog does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available in this article are for general informational purposes only.  Information on this website may not constitute the most up-to-date legal or other information. Please consult your tax advisor on all the above issues.

Leave a Reply