The IRS will refund those who overpaid taxes on unemployment benefits

DORAL, FL – On Wednesday, July 14, the IRS will be refunding those who overpaid taxes on their unemployment benefits through direct deposits. Paper checks will be sent on Friday, while throughout the summer other people that qualifies will also get a refund. 

According to the IRS, nearly 4 million taxpayers who filed their 2020 income tax returns before the American Rescue Plan was launched, which exempted up to $10,200 in unemployment benefits received in 2020 to those eligible, will be the recipients of these refunds. That is those who paid taxes on compensation they were eligible to have been exempt from.

The refunds are aimed to those who were eligible for the exemption but already paid taxes on those unemployment funds. 

Taxpayers who made less than $150,000 in “modified adjusted gross income” in 2020 were the ones the American Rescue Plan wanted to benefit.  In June, the IRS sent 2.8 million refunds to eligible taxpayers but said more were qualified.

The average refund sent this week is $1,265, according to the IRS. Some taxpayers will get more and some will get less.

“To ease the burden on taxpayers, the IRS has been reviewing the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify those people who are due an adjustment,” the IRS says.

People “due an adjustment” will either receive a refund for the amount they overpaid or have it applied to “other outstanding taxes” or “federal or state debts owed.” 

“Taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment,” the IRS says.

Photo: Unsplash.com