Unemployment Benefits in 2020? You May Get a Surprise Refund
Are you one of the 40 million that received unemployment benefits in 2020? When filing your tax returns you may find that you could receive a surprise refund.
According to the IRS refunds will start being issued in May to taxpayers to who have submitted returns but qualify for a tax break on 2020 jobless benefits. According to the information the refunds will continue into the summer months.
If you receive unemployment benefits, they are usually taxed as ordinary income. The pennyhoarder.com goes on to say-
But the $1.9 trillion American Rescue Plan that President Joe Biden signed into law on March 11 shields the first $10,200 of unemployment benefits for households with incomes under $150,000. If you’re married, each spouse can exclude the first $10,200 of unemployment benefits.
So say you have went ahead and filed already. Do you have to send in an amended return? According to the IRS it isn't necessary. The correct amount of unemployment compensation and taxes due will automatically be reconfigured. Then extra money will either be applied as a refund or it will be applied to taxes owed.
But wait...there's more! You may want to visit a tax professional on the matter because it's not clear if an amended return will need to be filed if the tax break makes you eligible for certain tax credits, like the Earned Income Tax Credit.
13 states may not get a break on their taxes. It looks like Missouri is not one of those 13 states. So take a deep breath...exhale. Once again, with all these changes for the 2020 tax year, consult a tax professional.