The IRS will begin providing reimbursements for 2020 unemployment insurance tax to some taxpayers this week, the agency said on Friday.
Refunds will be sent on an ongoing basis. Individual applicants with the “simplest” tax returns will get their refunds first, including those without children and those who have not applied for a refundable tax credit, the agency said.
Unemployment insurance benefits are usually considered taxable income. However, the American Rescue Plan (ARP), signed by President Joe Biden in March, excluded UI benefits of up to $ 10,200 from taxable income for 2020.
The IRS claims to have identified over 10 million people who filed their tax returns before the ARP became law and may have received a refund or a reduced balance on their tax bill.
In the second phase, more complicated returns are adjusted, including for married couples filing together. The agency expects this to be completed “by the end of summer”.