Although Congress is unlikely to authorize another batch of stimulus checks, this does not rule out the possibility of additional payments. Today is the first day that the increased child tax credit (CTC) will be deposited into bank accounts. Furthermore, individuals who overpaid their unemployment payments taxes will receive a second stimulus check, this time, in the form of a refund.
The IRS stated on Tuesday that people who overpaid unemployment benefits last year will get refunds this week. According to the agency, about four million tax refunds would be issued. The $1.9 trillion American Rescue Plan Act, passed in March this year, exempted up to $10,200 in unemployment compensation from the computation of taxable income in 2020. However, many individuals submitted their 2020 tax returns before the bill was signed into law.
How much will be the tax refund?
As a result, taxpayers who submitted their return before March and paid too much because of the exclusion will be entitled to a refund. This stimulus payment will be refunded to these taxpayers, or they can be applied to other unpaid taxes or any other federal or state debt.
Per CNET, the refunds are part of the American Rescue Plan, which made the first $10,200 in unemployment benefits for 2020 or $20,400 for married couples filing jointly nontaxable income. Approximately 13 million taxpayers may be entitled to the adjustment since they submitted their taxes before the measure was approved and overpaid. According to the IRS, the average refund is $1,265.
The IRS says there is no need to take any additional action because this modification affects between 10 and 13 million Americans. This is because qualified individuals will have their tax returns automatically updated, as per The Sun.
If you haven't already completed your tax return, you should include this reduction in unemployment income on Form 1040. This will help the agency to accurately compute your taxes.
It's crucial to note, however, that the exemption is solely for federal income taxes. It does not apply to state-level tax returns. You may wait for the letter that the IRS sends to people whose returns are being amended to find out the status of your refund and if it has been granted.
These letters are sent out within 30 days after a correction is made, and they will notify you whether you will receive a refund or whether the money was used to pay off debt. The deadline for filing tax returns was May 17; and if you haven't done so already, you should do it right now.
IRS tax refunds remain delayed
The National Taxpayer Advocate's annual report showed 35 million tax returns are still being held for manual assessment as of two weeks ago. So you're not alone if you're waiting for your tax refund.
The majority of the backlog, according to the report, is due to the impact of pandemic preventing staff access to IRS premises, implying that IRS employees are working from home. The IRS has been delivering stimulus checks, calculating various tax credits, and refunding overpayments of taxes on 2020 unemployment benefits in addition to dealing with all of the tax returns.
The IRS received 167 million calls during the filing season, which is a new high. According to the National Taxpayer Advocate, just 7% of those who called got through to a live person.
The National Taxpayer Advocate is a non-profit organization that provides free assistance to taxpayers. You can get in touch with them if you need help finding your return, WGAL8 reported.
Related Article: IRS Says Millions Will Receive Unemployment Tax Refunds. When Will You Receive Yours?