The IRS is sending out refunds to 4.6 million taxpayers who overpaid their taxes on unemployment compensation received in 2020.
The will mean a big lift for those who were not expecting to see any of that money returned.
“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 said in a statement. “For taxpayers who overpaid, the IRS will either refund the overpayment, apply it to other outstanding taxes or other federal or state debts owed.”
The IRS said that earlier in the year more than 10 million people submitted 2020 returns before the American Rescue Plan Act was signed into law. That meant that those individuals paid taxes on the first $10,2000 of unemployment compensation- which was washed by the COVID relief bill.
According to the IRS, refunds by direct deposit will begin on July 14 and paper check refunds will begin on July 16. A notice will be received in the mail explaining the correction.
In some cases, taxpayers may need to file an amended return if they are now eligible for deductions or credits not originally claimed on their return.
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