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If you were unemployed during the Covid-19 pandemic, then you may be eligible for a future unemployment tax refund! The American Rescue Plan Act of 2021 became law back in March. Since then, the IRS has issued over 8.7 million unemployment compensation refunds totaling over $10 billion. And more unemployment relief is to be expected for the rest of the year. In July of 2021, the IRS announced that another 1.5 million taxpayers will receive refunds averaging more than $1600, as the IRS is still processing tax returns. This would be the 4th round of refunds related to unemployment compensation since the beginning of the pandemic.
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Who is Eligible for an Unemployment Tax Return?
The American Rescue Plan Act of 2021 excluded up to $10,200 of 2020 unemployment compensation from taxable income calculations. This exclusion was applied to individuals and married couples who’s modified adjusted gross income was less than $150,000. So if you fit the criteria above, you may be on the list of taxpayers eligible for the tax return. According to the IRS official website: the IRS identified approximately 1.7 million taxpayers due an adjustment. Of that number, approximately 1.5 million taxpayers are expected to receive a refund. The refund average is $1,686.
When Will You Get The Refund?
This 4th round of refunds began to reach Americans on July 28th. However, the IRS has not been able to refund all of the taxpayers that qualify. The IRS has been quiet about communications for when they would refund the remaining eligible taxpayers.
An explanation for the delayed payment is the IRS may be lacking resources. The Taxpayer Advocacy Service (TAS), an independent group from the IRS, has recommended that congress provide additional funding to deal with issues that lead to poor communication, including extreme understaffing and outdated technology. These issues are not only crippling the IRS, but they are affecting the TAS themselves. The TAS is tasked with identifying common issues that occur between the IRS and taxpayers. Because of the unique circumstances of Covid-19, there has been an increase in demand for the services of TAS. In fiscal year (FY) 2017, TAS received about 167,000 cases. This year, the expectation of total case receipts is above 253,000 cases – an increase of over 50 percent compared with FY 2017.
How About Next Year’s Tax Relief?
Covid-19 has made two straight tax years a challenge for both the IRS and taxpayers. There is no guarantee that the 2021 tax year will be any easier! With these recent challenges, it is of the upmost importance to make sure that taxpayers are filing their taxes correctly. This is becoming more challenging as there has been a lot of new tax legislation introduced. While tax payers have the option to file taxes themselves, there are many complexities with tax filing that are hard for the untrained eye to manage. Even though many tax refunds have been delayed due to understaffing at the IRS, correctly filing a tax return can improve your chances at receiving the proper funds the following year.
If you are looking for professional help with regards to your tax returns, there are many options available. Some people find it important to consider your specific circumstances when choosing a tax relief company. Are you looking to maximize your tax returns? Or are you worried about how much money you may owe the IRS? Luckily, there are resources available that allow you to compare the best tax relief companies.
Article Topics
Taxes
Jackson is a consultant for a large American Asset Manager, notable clients include Morgan Stanley, Merrill Lynch, and Wells Fargo. He also writes on financial topics, including bitcoin, personal finance, and portfolio construction. Avid skier during the cold New England winters.
