The Internal Revenue Service (IRS) announced that individuals or families receiving unemployment benefits from the epidemic in 2020 may claim a tax exemption for up to $10,200 of those payments.
Many Americans are receiving unemployment benefits as a result of the Communist virus (Wuhan pneumonia) outbreak. The Internal Revenue Service (IRS) announced this week that some people who have received unemployment benefits in 2020 are expected to receive an automatic tax refund in May. The prerequisite is that these individuals have filed their tax returns prior to claiming the benefit tax credit.
The agency announced last month that individuals or families who received epidemic unemployment benefits in 2020 can claim a tax exemption for up to $10,200 of those payments. And eligible individuals do not have to file the relevant return on their own to receive it.
The exemption is part of President Joe Biden’s “American Rescue Plan. It applies to individuals and couples whose modified gross income is less than $150,000 in 2020.
The maximum exemption under the plan increases to $20,400 for married couples who both receive unemployment benefits and file jointly.
CNBC reports that the IRS plans to refund the tax first to individuals and then for couples filing jointly. The refunds will be phased in and continue through the summer. The agency noted that most people will receive a refund without having to apply for it themselves.
Without the tax exemption, millions of people who receive unemployment benefits would have to pay taxes on the money for unemployment benefits.
About 40 million people will receive about $580 billion in unemployment benefits in 2020, according to a report by the Century Foundation. But some states do not offer workers in their states the option to take a tax deduction from newly introduced unemployment programs, such as the federal Pandemic Unemployment Compensation (FPUC) program.
Researchers estimate that only 40 percent of unemployment benefits will be tax deductible throughout 2020. Now, Americans who qualify for the tax exemption can breathe a sigh of relief and not worry about this “extra” tax bill.
For those who receive more than $10,200 in unemployment benefits in 2020, they will still be taxed on the amount that exceeds that threshold.
Those who haven’t filed their taxes yet can have the exemption automatically added to their tax return.
Recent Comments