Types of adjustments include a refund, payment of IRS debt or payment offset for other authorized debts. If the IRS adjusts someone’s tax return, the taxpayer will receive a letter within about 30 days, explaining what kind of adjustment was made and the amount of the adjustment. Taxpayers who have qualifying children and become newly eligible for EITC after the exclusion is calculated may have to file an amended return to claim any new benefits. The IRS also can adjust tax returns where EITC was claimed and qualifying children identified. The IRS can adjust tax returns for those who are single with no children and who become eligible for EITC. The agency is also making corrections for the earned income tax credit, premium tax credit and recovery rebate credit affected by the exclusion. This is not the amount of the refund taxpayers will receive. Taxpayers should not have been taxed on up to $10,200 of the unemployment compensation. The American Rescue Plan Act of 2021 excluded up to $10,200 in unemployment compensation per taxpayer from taxable income paid in 2020. Some taxpayers will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. ![]() IRS efforts to correct unemployment compensation overpayments will help most affected taxpayers avoid filing an amended tax return. ![]() For eligible taxpayers, this could result in a refund, a reduced balance due or no change to tax. The IRS is reviewing tax returns filed before the American Rescue Plan of 2021 became law in March to determine the correct taxable amount of unemployment compensation and tax.
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