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The headquarters of the Internal Revenue Service (IRS) in Washington, DC
Samuel Corum / Bloomberg via Getty Images
Unemployed Americans should wait to file an amended tax return to get further tax relief on unemployment benefits received last year, the IRS said Friday.
The American Rescue Plan Act of 2021, which President Joe Biden signed on Thursday, waives federal tax on up to $ 10,200 in unemployment benefits for single adults who earned less than $ 150,000 a year in 2020 ( the limit is $ 20,400 for two workers in a married couple.)
Amounts over $ 10,200 are still taxable. States can also decide not to offer the tax relief.
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Those who filed a tax return before the $ 1.9 trillion Covid relief measure became law should wait to file an amended return until the IRS releases additional information, the IRS said. agency.
“For those who received unemployment benefits last year and have already filed their 2020 income tax return, the IRS stresses that they should not file an amended return at this time, until the IRS issues additional guidance, ”the IRS said Friday.
The IRS has received nearly 56 million returns and processed nearly 49 million as of March 5, according to the agency.
About 40 million people received unemployment benefits last year, according to the Century Foundation. The average person received assistance of $ 14,000.
A waiting pattern can put some workers in a difficult position, especially those who have paid a big tax bill on their unemployment benefits and now need to figure out how to get the funds back, said Janet Holtzblatt, senior fellow at Urban-Brookings Tax Policy Center. .
New tax instructions
The IRS also released tax filing instructions for those who had yet to file a return on Friday.
“For those who have not yet done so, the IRS will provide a spreadsheet to paper filers and work with the software industry to update the current tax software so that taxpayers can determine how to report their income. of unemployment on their 2020 tax return, ”the IRS said. .
The 2020 tax filing deadline is one month away, April 15.
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