IRS Continues Unemployment Compensation Adjustments
The American Rescue Plan Act of 2021 excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations. The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
IRS announced this week that another 1.5 million taxpayers will receive refunds averaging more than $1,600, as IRS continues to adjust unemployment compensation from previously filed income tax returns. Refunds by direct deposit began yesterday and refunds by paper check will begin tomorrow.
This is the fourth round of refunds related to the unemployment compensation exclusion provision. The average refund amount is higher for this round because IRS included an adjustment to the Advance Premium Tax Credit.
Taxpayers will generally receive letters from IRS 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. Learn more here