More of those surprise tax refunds go out this week, the IRS says -- will you get one?
Since May, the IRS has paid billions in tax refunds to Americans who weren't expecting money back. Direct deposits and paper checks have gone to millions of people whose tax bills for last year were reduced after they'd already paid them. The tax agency said last week there will be another wave of these surprise refunds before 2021 ends. It has been nearly two months since the last batch: More than 400,000 payments went out in early November totaling over half a billion dollars.
The refunds are related to 2020's surge in unemployment during the onset of the pandemic. The economy lost a record 20.5 million jobs in April of last year as America's jobless rate soared to 14.7% and new claims for unemployment benefits skyrocketed.
Normally, unemployment checks are taxed the same as any other income. But President Joe Biden's COVID-19 rescue package from March of this year allowed people to exclude piles of those benefits from their 2020 taxes: up to $10,200 for individuals and $20,400 for couples filing jointly.
The hiccup for the IRS was that by the time Biden signed the relief bill, in mid-March, many people had already filed their 2020 tax returns. As a result, many Americans paid too much tax on their unemployment benefits, IRS officials say. The agency has slowly been going through the returns of those taxpayers and paying out refunds.
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If the tax agency discovers you're still owed an unemployment tax refund, or "correction," the money should come automatically, based on the banking and address information from your tax return. But the money has been slowed by a massive backlog the IRS has been working through. The IRS says it has so far issued more than 11.7 million tax refunds on 2020 unemployment benefits, for a total of $14.4 billion. Payments in the last batch averaged $1,189.
https://finance.yahoo.com/news/more-surprise-tax-refunds-years-213100480.html
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