The IRS has to go through those manually, and it’s already behind. But she said they should definitely not file an amended return. If your filing status is married filing jointly and both spouses received unemployment benefits, both can exclude up to 10,200. He’s planning to use it to help pay down $10,000 worth of medical debt.Įrin Collins, the IRS’ national taxpayer advocate, estimated that as many as 10 million taxpayers are in the same boat as Gannis. The American Rescue Plan Act of 2021 provides relief to individuals who received unemployment compensation in 2020. It’s hard for Gannis to wait for his refund. “I’d rather have a process where it’s not all on them, where there’s action by me and a response by them,” he said. Then, a few days ago, the IRS announced it would recalculate their returns for them. You may receive a tax waiver on up to 10,200 of unemployment benefitshere’s how Since the American Rescue Plan was signed by President Biden after many Americans already filed taxes, the. Initially it told taxpayers like Gannis to sit tight as it figured out what to do. Department of the Treasury Internal Revenue Service (IRS) 1040 Individual Income Tax sits with a W-2 wage statement in Tiskilwa, Ill., March 20, 2020. “I’m diligent, I get my stuff in on time and then bam! I find out that, you know, $10,000 of my income is now not taxable - I got a tax break. He filed his taxes a few days before Congress passed the latest COVID-19 relief bill, which - surprise! - made the first $10,200 of 2020 unemployment benefits tax free for households with adjusted gross income below $150,000. The exclusion from gross income is not a refundable tax credit. Josh Gannis, a teacher in Tacoma, Washington, was laid off a year ago and received about $15,000 in unemployment benefits. The American Rescue Plan Act allows eligible taxpayers to exclude up to 10,200 (up to 10,200 for each spouse if married filing jointly) from their gross income, which will likely lower the tax liability on their 2020 tax return. But there’s a catch - they’ll have to wait for their refunds. Unemployment tax break:IRS tax refunds to start in May for 10,200 unemployment tax break: Heres what you need to know Getting out of paying taxes on 10,200 of income can be a good thing. Now the IRS says it will recalculate their tax returns for them. Millions of Americans filed their taxes before Congress changed the rules, making a big chunk of unemployment benefits tax free. Sometimes it doesn’t pay to be an early bird.
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