The IRS has successfully gone through approximately 14 million 2020 tax returns to see who was eligible for the correction of overpayment on taxes for unemployment compensation. The IRS either gave those people refunds or applied the extra money to other debts and balances owed to the government agency starting in May 2021. This led to 12 million refunds worth $14.8 billion, with an average of $1,232 for each taxpayer.
What This Means for Your Clients
The IRS recently finished fixing the tax year 2020 accounts for people who paid too much tax on their unemployment compensation from 2020. The government passed a law that excluded up to $10,200 of unemployment compensation from being taxed, but only for people who earned less than $150,000.
This was done to ease the cumbersome process for accountants and taxpayers alike to review and file an amended tax return. The included adjustments that the IRS made fell under the following credits:
- Recovery Rebate Credit
- Additional Child Tax Credit
- American Opportunity Tax Credit
- Earned Income Tax Credit
- Premium & Advanced Premium Tax Credit
Despite the diligence from the IRS to correct, amend, and refund those who fell under the criteria, some may feel they needed to be included. If your clients are eligible for the correction but have yet to get it, you may need to file an amended tax return.
More information on tax preparation and amendments is available on the IRS website and through our IRS-Approved Courses.
