The Internal Revenue Service recently said it will begin to automatically correct 2020 tax returns for people who got unemployment in 2020 and also can get the $10,200 tax break, Forbes said.
The tax break is a part of the Democrats’ American Rescue Plan stimulus bill which President Biden passed as of March 11th.
Usually, the IRS taxes this type of unemployment benefits and they are meant to be reported on Americans’ tax return. As a consequence of the relief program, these benefits are now not going to be taxed.
If you got unemployment benefits in 2020, you will get a 1099-G form from your state showing how much you got in 2020 and how much taxes you paid.
This form must be filed along with your taxes. Some states might do it for you, but you must confirm that it is done.
This could save you thousands. If you qualify for the tax break of $10,200, and are in the 22% bracket and single, you might qualify for a savings of up to $2,244. And if you are married and both you and your spouse qualify for this break, you could save up to $4,488.
Since the bill was passed into law, millions of people have filed their taxes without the knowledge of the tax break.
The IRS has also found 10 million people who filed before the relief bill was enacted and revealed that they will automatically change their returns for them. This is about half of the 23 million people who filed for unemployment during the pandemic.
The IRS also said that there is no need for Americans to send in an amended return unless new numbers make them now eligible for more federal credits and “deductions that are not already within their original tax return.”
Author: Steven Sinclaire