IRS says it sent 12 million refunds averaging $1,232 a pop
The IRS said it recently finished correcting tax returns filed for 2020 that included overpayments for unemployment benefits that workers received that year. The tax agency said it has issued 12 million tax refunds as a result.
The average tax refund is $1,232, with the agency sending a total of $14.8 billion back to taxpayers, the IRS said on Friday. Taxpayers were sent letters from the IRS to inform them about the fixes to their 2020 tax filings, it added.
The tax review came about due to the American Rescue Plan Act of 2021, which was signed into law by President Joe Biden in March 2021. The legislation excluded up to $10,200 in 2020 unemployment aid from being counted as taxable income, but some taxpayers had already filed their returns in early 2021 before the law became effective.
Because of that, the IRS reviewed returns filed by workers who reported jobless aid as income in 2020 but who filed their forms before the law was enacted. Unemployment aid is typically considered taxable income.
"Some taxpayers received refunds, while others had the overpayment applied to taxes due or other debts," the IRS said on Friday. "In some cases, the exclusion only resulted in a reduction in their adjusted gross income."
Refunds for 12 million filers
About 14 million tax returns were corrected, but the IRS issued refunds for 12 million of those filings, it added. Individuals and married couples whose adjusted gross income was below $150,000 were eligible to have some unemployment aid untaxed.
Some taxpayers have been waiting for more than a year for the refunds, according to the Akron Beacon Journal, which last month highlighted the case of a taxpayer who filed his 2020 return in February 2021. At the time, Bob Dyer — a former columnist with the newspaper — believed he owed almost $2,600 to the IRS. But, after the relief on paying taxes for jobless aid was calculated, he was actually due a refund of more than $1,000.
Dyer was still waiting for his refund in December, according to the Akron Beacon Journal. He was told that he shouldn't amend his 2020 return, and that the IRS would automatically refund the money. Dyer told the publication the tax agency informed him several times it required another 60 days to resolve the issue.
According to the IRS, it has now finished those corrections, although it added that taxpayers who are eligible for the exclusion and who haven't gotten a correction from the IRS may need to file an amended 2020 tax return to claim their refunds.