The IRS announced that they recently finished correcting tax returns that were filed for 2020, which included overpayments for unemployment benefits that workers received that year. The agency said it issued around 12 million returns as a result.
Reason Behind the Corrections
On average, each tax refund was about $1,232, and the agency said they sent a total of $14.8 billion back into the pockets of taxpayers across the country. They also added that taxpayers were sent letters from the IRS informing them about the fixes to their 202 tax filings.
The reason for this review of past filings came about because of the American Rescue Plan Act of 2021, which President Biden signed into law in March of 2021. This legislation excluded up to $10,200 in 2020 unemployment aid from being counted as taxable income for taxpayers who received the benefits. However, some taxpayers already filed their returns in early 2021 before the law became effective.
“Some taxpayers received refunds, while others had the overpayment applied to taxes due or other debts,” the IRS said on Friday. “In some cases, the exclusion only resulted in a reduction in their adjusted gross income.”
Wrap Up
In total, the IRS corrected about 14 million returns from 2020, and 12 million of those were issued refunds. It is encouraging to see legislation in the American Rescue Plan Act of 2021, comes to fruition. If you need help with your tax returns, contact DSJ for professional help this tax season.