IRS issuing additional tax refunds to 430,000 people

The Internal Revenue Service has issued another round of refunds to workers who paid taxes on their unemployment benefits in 2020.

This round of refunds totaled more than $510 million and went to 430,000 workers with an average refund of $1,189.

Typically, unemployment benefits are counted as taxable income, but the relief package passed by Congress in March exempted up to $10,200 in benefits for taxpayers with a 2020 income of up to $150,000. For married couples filing jointly, $20,400 in benefits are exempted.

The issue is that some taxpayers filed their 2020 return before Congress acted and paid taxes on those benefits.

The IRS is refunding money without taxpayers having to take any action.

To date, the IRS has identified more than 16 million taxpayers who may be eligible for an adjustment.

Some have gotten refunds while others have had the overpayment applied to taxes that are owed or other debts.

So far, the IRS has issued 11.7 million refunds totaling $14.4 billion.

The latest batch of corrections affected 519,000 returns.

The IRS said its review is nearly complete and that it plans to issue another round of corrections by year-end.

Most taxpayers affected by this round of adjustments will receive letters from the IRS within 30 days of the adjustment informing them whether they got a refund, whether the money was applied to a tax debt or some other kind of debt, and the amount of the adjustment.

The IRS also is making corrections for Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Premium Tax Credit, and Recovery Rebate Credit.

Most taxpayers don’t need to take any action.

Other taxpayers who become eligible for other credits and deductions after the adjustment is calculated, but not claimed on their original return will need to file an amended tax return to claim any benefits.

In some states, affected taxpayers will have to file an amended state tax return and school district tax return if they want to get their refund.