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Susan Tompor: Single taxpayers who lost work in 2020 could see extra refund money soonest

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

More than 10 million people who lost work in 2020 and filed their tax returns early this year are going to get a special review of their tax returns, which could generate extra refund cash.

The Internal Revenue Service said Friday that it will begin issuing tax refunds this week to eligible taxpayers who filed their 2020 tax returns in February and early March and paid income taxes on all their unemployment benefits.

A portion of jobless benefits was excluded from taxable income under the American Rescue Plan, which was signed into law on March 11.

The change took place roughly a month after the IRS began accepting tax returns Feb. 12 and before many early filers would have been able to take advantage of the new generous tax break.

After a review, some people could see a tax refund, a reduced balance for taxes due or no change to their tax situation, according to the IRS.

Monday is the filing deadline for federal tax returns in most states, including Michigan.

 

Taxpayers who have not yet filed a tax return should pay attention to the new rules relating to jobless benefits and, the IRS says, "follow the guidance for Forms 1040 and 1040-SR, which details how to exclude unemployment compensation."

The IRS will make corrections automatically for those early filers.

The IRS will first tackle simple tax returns for single individuals. That group would include tax returns that do not claim children as dependents or do not claim any refundable tax credits.

The next phase will include more complex tax returns involving married couples filing jointly. The IRS anticipates it will take through the end of summer to review and correct these returns.

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