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Susan Tompor: IRS sends 2.8 million extra tax refunds relating to jobless benefits

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

More than 2.8 million in extra federal income tax refunds were sent this week to taxpayers who are owed money after an abrupt change this year in the tax rules relating to jobless benefits.

Not everyone who qualifies is seeing their money yet. Many will have to wait a few weeks or more.

The Internal Revenue Service said Friday that it plans to issue the next set of refunds in mid-June to those early filers who missed out on a tax break that became law March 11.

"The review of returns and processing corrections will continue during the summer as the IRS continues to review the simplest returns and then turns to more complex returns," the IRS said Friday afternoon.

So far, the IRS has reviewed more than 3.1 million returns in this category.

The IRS finds itself recalculating taxes for 13 million taxpayers who filed their tax returns in February and early March before they could benefit from an important rule change relating to taxable unemployment benefits.

 

Some people will receive refunds. Some money will show up by direct deposit; others will receive a check in the mail. These refunds will be issued periodically, according to the IRS.

Some will see this money applied to taxes due or other debts. For some, the IRS said, there will be no change.

The American Rescue Plan, signed into law March 11, allowed taxpayers to exclude up to $10,200 of unemployment benefits received in 2020 for a single person from taxable income — or as much as $20,400 for married couples filing jointly if both people lost work in 2020.

The exclusion applies to households earning up to $150,000. If your modified adjusted gross income is $150,000 or more, you can’t exclude any unemployment compensation.

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