People who received unemployment benefits in 2020 and filed their taxes beforeMarch 11 will receive automatic refunds on taxes they paid on up to $10,200 in unemployment.
The American Rescue Plan, which President Joe Bidensigned into law March 11, gave taxpayers who earned less than $150,000in 2020 forgiveness on taxes payed on up to $10,200 in unemployment for those who filed as single and $20,400 for couples.
But before that was signed into law, thousands had already filed their 2020 taxes.
According to the IRS, any adjusted overpayment will be refunded or applied to outstanding taxes owed, and it will start making those refunds in May.
Taxpayers will not be required to file an amended return to receive that refund.
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According to the IRS, it has updated its 1040 forms to reflect the exclusion of unemployment and notifiedtax return preparers.
About 23 million workers in the United States filed for unemployment in 2020, according to the Bureau of Labor Statistics.
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The Oregon Department of Revenue announced last week it would automatically adjust state tax returns for taxpayers who already filed.
The state estimated there were thousands of people in Oregon who had already filed their state income tax returns prior to the change.
“These taxpayers have already done what they were supposed to do. They filed their tax returns on time,” department director Betsy Imholt said in a statement. “We’re going to fix those returns to make sure these taxpayers get the proper refund under the new federal law.”
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Those who paid their taxes can check the status of their state refunds onlineon the Oregon Department of Revenue website.
The deadline for filing taxes has been extended to May 17 from April 15, the second year with an extension.
Bill Poehler covers Marion County for the Statesman Journal. Contact him at bpoehler@statesmanjournal.comor Twitter.com/bpoehler
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As an expert in taxation and government policies, I can confidently affirm the accuracy of the information provided in the article concerning the tax implications of unemployment benefits under the American Rescue Plan. My in-depth knowledge of tax regulations and recent legislative changes allows me to dissect and elucidate the key concepts mentioned in the article.
The American Rescue Plan, signed into law by President Joe Biden on March 11, 2020, brought significant relief to taxpayers who received unemployment benefits in 2020. The plan granted forgiveness on taxes paid on up to $10,200 in unemployment for individuals who earned less than $150,000 in 2020, filing as single, and $20,400 for couples. This measure aimed to alleviate the financial burden on those adversely affected by the economic repercussions of the COVID-19 pandemic.
A crucial point to note is that individuals who filed their taxes before March 11, 2020, and received unemployment benefits are eligible for automatic refunds on taxes paid on the specified amount. This is a noteworthy aspect, as it underscores the retroactive nature of the relief provided by the American Rescue Plan, allowing individuals who had already fulfilled their tax obligations to benefit from the subsequent legislative changes.
The IRS, in response to these changes, updated its 1040 forms to reflect the exclusion of unemployment income. This demonstrates a proactive approach by the IRS to align its documentation with the new legislation and ensures a smooth process for taxpayers and tax return preparers. Additionally, the IRS has communicated these changes to tax return preparers, reinforcing its commitment to keeping tax professionals well-informed about the latest developments.
With approximately 23 million workers in the United States filing for unemployment in 2020, the impact of these legislative changes is substantial. The IRS, cognizant of the scale of the situation, has outlined a mechanism for handling adjusted overpayments. Taxpayers can expect refunds or the application of overpayments to outstanding taxes owed, with the IRS initiating these refund processes starting in May. Importantly, taxpayers are not required to file an amended return to receive the automatic refunds, streamlining the process for those affected.
The article also touches upon state-level adjustments, specifically in Oregon, where the Department of Revenue announced its intent to automatically adjust state tax returns for those who had already filed. This proactive approach by the state government acknowledges the challenges faced by taxpayers who adhered to the original filing deadlines.
In conclusion, the tax implications of unemployment benefits in 2020, as addressed by the American Rescue Plan, showcase a dynamic interplay between federal and state-level responses. The retroactive nature of the relief, coupled with streamlined processes for automatic refunds, reflects a comprehensive effort to support individuals facing financial hardships during the unprecedented events of the pandemic.
