Friday, June 4, 2021

Update for taxpayers who paid taxes on 2020 unemployment compensation

 The IRS is sending more than 2.8 million refunds to those who already paid taxes on 2020 unemployment compensation.

Earned Income Tax Credit (EITC) adjustments
  • Taxpayers who have qualifying children and who become eligible for EITC after the exclusion is calculated may have to file an amended return to claim any new benefits.
  • The IRS can adjust tax returns for those who are single with no children and who become eligible for EITC.
  • The IRS also can adjust tax returns where EITC was claimed and qualifying children identified.

The IRS plans to issue the next set of refunds in mid-June. The review of returns and processing corrections will continue during the summer as the IRS continues to review the simplest returns and then turns to more complex returns.

Taxpayers will receive letters from the IRS, generally within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.