Headquarters of the Internal Revenue Service (IRS) in Washington, DC
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Unemployed Americans should wait to file an amended tax return to get a new tax cut on unemployment benefits received last year, the IRS said Friday.
The 2021 U.S. Rescue Plan Act, signed by President Joe Biden on Thursday, waives federal tax on up to $ 10,200 in unemployment benefits for single adults earning less than $ 150,000 a year. year 2020. (The ceiling is $ 20,400 for two workers of a married couple.)
Amounts in excess of $ 10,200 remain taxable. States may also decide not to offer the tax credit.
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Those who filed a tax return before Covid’s $ 1.9 trillion relief measure became law should wait to file an amended return until the IRS issues additional information, said the agency.
“For those who received unemployment benefits last year and have already filed their tax return for 2020, the IRS stresses that they should not file an amended return at this time, until the IRS issue additional guidelines, “the IRS said Friday.
According to the agency, the IRS received about 56 million returns and processed about 49 million as of March 5.
According to the Century Foundation, nearly 40 million people received unemployment benefits last year. The average person received $ 14,000 in assistance.
A withholding pattern can put some workers in a difficult position, especially those who paid a large tax bill for their unemployment benefits and now have to figure out how to recover the funds, said Janet Holtzblatt, a policy center fellow. Urban-Brookings Attorney. .
New tax instructions
On Friday, the IRS also issued instructions for filing taxes on those who had not yet filed a return.
“For those who have not yet filed it, the IRS will provide a spreadsheet for paper files and work with the software industry to update current tax software so taxpayers can determine how to report their unemployment income in the 2020 tax return, ”the IRS said. .
The deadline for filing taxes for 2020 is one month, April 15th.