IRS will begin refunds for unemployment taxes in May
Americans who filed their tax returns ahead of the recent stimulus package, which has removed the tax burden on jobless benefits, will soon get their refunds. Checks will begin going out to taxpayers starting May 1.
The American Rescue Plan waived federal taxes on up to $10,200 of unemployment benefits per person. But the bill, which also extended another $300 in weekly unemployment benefits, didn’t become law until March 11, well after millions of Americans had already filed their 2020 taxes.
That led to some initial confusion. Taxpayers who had already filed their returns wondered whether they would have to file an amended version. The IRS announcement clarified that no additional action will be required.
“Because the change occurred after some people filed their taxes, the IRS will take steps in the spring and summer to make the appropriate change to their return, which may result in a refund,” the agency said in a statement. “The first refunds are expected to be made in May and will continue into the summer.”
The refunds will come in two waves. First, individuals who are eligible for the exclusion will be processed, followed by returns filed jointly by married couples who are eligible for an exclusion of up to $20,400.
The IRS says the only reason people would have to file an amended return is if the exclusion makes them eligible for additional credits and deductions that were not a part of their original tax documentation. The agency also recommended people review their state returns.
At present, 13 states are not waiving taxes on unemployment compensation. That number could get smaller in the weeks to come as some states are still considering an update to their rules.
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This story was originally featured on Fortune.com