If you are one of the over 10 million taxpayers who reported unemployment income before the $10,200 tax exemption was enacted, then we have good news! The IRS announced Friday, May 14, that corrections are being made and refunds are currently being issued. Here is what you should know:
- Corrections are being made automatically in a phased approach, correcting the simpler returns first. If you have a more complex tax return, then you can expect your return to be corrected in phase 2, which could take until the end of summer.
- If you are due a refund after the correction, refunds will be issued by direct deposit if you provided your bank account information when filing your 2020 return. Otherwise, you will receive a paper check.
- You will receive a notice from the IRS detailing any corrections made.
- If you had a reduced Recovery Rebate Credit due to income, then this credit will be adjusted automatically without any action on your part.
- If your new Adjusted Gross Income provided by the IRS qualifies you for an income-based credit that you were unable to claim on your original return, such as the Earned Income Credit, you will need to file an amended return to claim that credit.
- If you made a repayment of the Premium Tax Credit, that repayment is also being automatically refunded without any action required on your part.
Not everyone who reported unemployment income will receive a refund. You must make less than $150,000 for this exemption. If you owe taxes or are subject to any of the usual refund offset rules, then the refund amount will be applied to any unpaid debts. If you have not filed your tax return, don’t delay. For most of the country, today is the tax deadline! File your return through IOOGO Tax today!