The Internal Revenue Service (IRS) refund under the $10,200 unemployment tax exemption could reach millions of Americans in the coming days as part of a second effort to send out a new round of payments.
In a statement on June 4, the IRS said it would send out a second batch of refunds under the tax exclusion contained in the Biden Administration’s “American Bailout Plan” by the middle of this month.
Out of a total of 13 million people eligible for the exemption, to date, the IRS has reviewed more than 3.1 million returns and issued some 2.8 million refunds.
Refunds were not granted in all cases, as the IRS review could lead to forfeiture of the money for outstanding debts owed to the IRS or other entities.
Refund mailing process will be extended until the end of the summer.
The process of correcting tax returns began in mid-May with the simplest returns and will extend through the end of the summer with the evaluation of more complex documentation or those claiming dependents and tax credits.
“The IRS plans to issue the next set of refunds in mid-June. Review of returns and processing of corrections will continue through the summer as the IRS continues to review the simpler returns and then moves on to the more complex returns,” the tax collector’s office reported.
In some cases, individuals will need to file an amended tax return with the IRS.
“Taxpayers who have qualifying children and who become eligible for the EITC after the exclusion is calculated may have to file an amended return to claim new benefits. The IRS may adjust tax returns for those who are single with no children and who are eligible for the EITC. The IRS may also adjust tax returns on which the EITC was claimed and qualified children were identified,” the agency said.
10,200 is the maximum amount that can be excluded.
The 2021 American Bailout Plan excluded up to $10,200 in unemployment compensation in 2020 per taxpayer. “The $10,200 is the maximum amount that can be excluded when calculating taxable income; it is not the amount of refunds,” the bureau clarified.
Married couples can exclude up to $20,400.
The exemption applies to Americans who earned less than $150,000 in adjusted gross income.
“You are eligible to exclude unemployment compensation if you received it in 2020 and your modified adjusted gross income (AGI) is less than $150,000. Modified AGI for purposes of qualifying for this exclusion is your 2020 adjusted gross income minus the total unemployment compensation you received. This limit remains the same for all tax states, regardless of whether you are married filing a joint tax return (it does not double to $300,000),” the IRS explained in another post on its website.
In the case of married couples, they can exclude up to $20,400.
“If you and your spouse file a joint return and your joint modified AGI is less than $150,000, you must exclude up to $10,200 of your unemployment compensation and up to $10,200 of your spouse’s unemployment compensation”, the agency said.