Unemployed people who have overpaid taxes will receive refunds starting in May, according to IRS

Unemployed Americans who filed their taxes early this season and may have overpaid can expect a refund starting in May, the government said on Wednesday.

Under the American Rescue Plan, up to $ 10,200 in unemployment benefits for singles (and $ 20,400 for married couples) exempt from federal income tax. But the law was signed on March 11 – more than a month after the start of the tax filing period and some 66 million people had already filed their tax returns.

For taxpayers who have already filed and received unemployment benefits last year, “the IRS will take action in the spring and summer to make the appropriate changes to their return, which may result in a refund. The first refunds are expected. be carried out in May and will continue through the summer, ”the agency said on Wednesday.

The IRS will change returns for single taxpayers first, followed by married couples and “others with more complex returns,” the agency said.

Most taxpayers won’t need to file an amended return to recover the tax they overpaid on unemployment income, the IRS said.

However, taxpayers will need to amend last year’s return if omitting $ 10,200 in unemployment income would make them newly eligible for tax credits, the agency said.

For example, a single parent could recoup $ 3,584 on last year’s taxes by claiming the earned income tax credit – provided their income was less than $ 41,756 last year. If a person earned $ 43,000 last year and part of their income was from unemployment benefits, they would have to file an amended return for the 2020 tax year to show the lowest income total that they can claim. would claim the credit, the IRS said.

The IRS also noted that if a person has unpaid tax debts, any refund they get under the new laws could be “applied against other unpaid taxes.”

A record number of Americans received unemployment assistance last year after the Coronavirus pandemic rocked the economy from February. At one point, 33 million people, or one-fifth of the American workforce, were receiving some kind of unemployment assistance.