IRS returning overpaid unemployment money to 2.8M filers


The IRS says it is reviewing millions of returns and determining who is due a refund for tax payment on unemployment income. (Getty Images)

(NEXSTAR) — The IRS plans to send back money to 2.8 million Americans who filed taxes early, before legislation that waived tax on unemployment compensation paid in 2020.

The American Rescue Plan signed earlier this year excluded up to $10,200 in unemployment compensation per taxpayer paid in 2020. Filers who paid their taxes early did not deduct those funds and are now due money back. Refunds will be calculated using the maximum allowance. A typical refund amount will be far smaller than $10,200.

“So far, the IRS has identified 13 million taxpayers that may be eligible for the adjustment,” the IRS said in a statement. “Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some, there will be no change.”

As of Monday, the IRS said it had reviewed over 3.1 million returns, with more than 2.8 million receiving refunds. The agency said it will continue the reviews through summer, starting with the simplest returns and then working with the more complex calculations.

Taxpayers can expect a letter within 30 days of an adjustment notifying them of the changes to their return, according to the IRS. Some families with children may require an amended return if the adjustment makes the household available for the Earned Income Tax Credit.

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