The IRS will start issuing extra unemployment tax refunds later this month on 2020 unemployment benefits.
The American Rescue Plan, which President Joe Biden signed into law on March 11, retroactively waived federal taxes on the first $10,200 worth of unemployment aid received per person in 2020.
Married taxpayers filing jointly can exclude up to $20,400 if both received unemployment. The exemption only applies to tax filers who made less than $150,000 last year, whether they are filing as single or married.
The IRS has a plan to help Americans who filed their 2020 tax returns before the stimulus package became law in mid-March, meaning they weren’t able to take advantage of the tax break. It will automatically re-compute their returns and issue eligible filers an extra refund check.
Last week the agency clarified its timing: “The IRS will perform the corrections starting in late May and continue throughout the summer and into the fall,” it wrote on its FAQ page Friday. “Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed.”
The agency didn’t confirm an exact start date, CNBC reports. But the IRS did tell CNBC the refunds will be issued in two phases.
The first phase will include Americans who are single or are married but filed separately. The second phase will include those with more complex tax returns.
