Remember the IRS announcement concerning the exclusion of some unemployment income and resulting refunds for some? A first round of refunds was recently issued, and now Round 2 has begun📢‼️… (how many were in Round 1 🤔😒)
If you overpaid income taxes due to receiving unemployment compensation but not applying the exclusion that was granted through the American Rescue Plan Act of 2021 – and were not included in the first round of refunds, the IRS just announced that a second round of refunds will be issued in the next few days to about 4 million people who filed their 2020 tax return without excluding up to $10,200 of their unemployment income (due to the timing of the passing of the law).
The average refund related to this exclusion adjustment is reported by the IRS to be $1,265 (of course, yours may be more or less – check with you tax advisor or a CPA).
For most affected, the adjustment is supposed to be made automatically by the IRS. However, the IRS has finally provided more clarity as to who should amend their return, and has now indicated that an amended return should be filed if you:
- Are now eligible for the Additional Child Tax Credit due to exclusion of a portion of your unemployment income
- Are now eligible for the Earned Income Tax Credit (with qualifying dependents) after applying the unemployment compensation exclusion
- Are now eligible for any other credits or deductions due to the unemployment exclusion
Be sure to seek advice from your personal tax advisor or a licensed CPA regarding on whether or not amending your return is appropriate for your tax situation, amending your return correctly, and including the required schedules and forms.
And now’s the perfect time to jog on over to Shelly’s Frugality to setup a notification 🔔 for the upcoming Summer Savings Series! You won’t want to miss it!
Stay cool 😎, and stay encouraged ❤️!
Shelly
Disclaimer: This information is provided for general information purposes only and do does not constitute nor is to be construed as tax, financial, nor legal advice. Please consult with an accountant, financial advisor, or attorney for advice suitable for your personal situation.