IRS will calculate, send out refunds for jobless aid

The IRS said Wednesday it will automatically calculate and send refunds to those who paid taxes on unemployment benefits received during the coronavirus pandemic.

The agency said that unemployment recipients eligible for tax breaks enacted through President Biden’s relief bill will automatically receive refunds for taxes paid on their jobless aid.

The relief bill, signed by Biden on March 11, allows taxpayers who earned less than $150,000 in modified adjusted gross income to exclude up to $10,200 in unemployment benefits — $20,400 for married couples filing jointly — from their 2020 taxable income. Unemployment aid is usually considered taxable income.

Since many Americans already filed their 2020 taxes before Biden signed the relief measure, the IRS said it will calculate refunds for those who would have been able to deduct unemployment benefits from their taxable income had they waited to do so themselves.

“For those taxpayers who already have filed and figured their tax based on the full amount of unemployment compensation, the IRS will determine the correct taxable amount of unemployment compensation and tax. Any resulting overpayment of tax will be either refunded or applied to other outstanding taxes owed,” the agency said.

“There is no need for taxpayers to file an amended return unless the calculations make the taxpayer newly eligible for additional federal credits and deductions not already included on the original tax return.”

The IRS said refunds for taxes paid on unemployment aid will begin reaching recipients in May. The deadline to file 2020 personal income taxes has been extended to May 17.