The headquarters of the Internal Revenue Service (IRS) in Washington, DC
Samuel Corum / Bloomberg via Getty Images
Unemployed Americans should wait to file an amended tax return to get a new tax break on unemployment benefits received last year, the IRS said on Friday.
The American Rescue Plan Act of 2021, signed by President Joe Biden on Thursday, exempts up to $ 10,200 in unemployment benefits from federal taxes for single adults who earned less than $ 150,000 a year in 2020 (the limit is $ 20,400 for two workers in a married couple). .)
Amounts over $ 10,200 are still taxable. States can also decide not to offer the tax exemption.
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Those who filed a tax return before the $ 1.9 trillion Covid relief measure became law should wait to file an amended return until the IRS releases additional information, the agency said.
“For those who received unemployment benefits last year and have already filed their 2020 tax return, the IRS emphasizes that they should not file an amended return at this time, until the IRS issues additional guidance,” the IRS said Friday. .
The IRS received nearly 56 million returns and processed nearly 49 million as of March 5, according to the agency.
About 40 million people received unemployment benefits last year, according to the Century Foundation. The average person received $ 14,000 in assistance.
A withholding pattern can put some workers in a tough spot, especially those who paid a big tax bill for their unemployment benefits and now must figure out how to get the funds back, said Janet Holtzblatt, senior researcher at the Center for Tax Policy at Urban-Brookings. .
New fiscal instructions
On Friday, the IRS also issued tax filing instructions for those who had not yet filed a return.
“For those who have not yet filed, the IRS will provide a paper taxpayer worksheet and will work with the software industry to update current tax software so taxpayers can determine how to report their unemployment income on their return. 2020 tax bill, “the IRS said. .
There is one month left until the 2020 tax filing deadline, April 15.