<figure>
 <img src="https://media.eaglewebservices.com/public/2020/9/1599869632873.png" alt="" />
 <figcaption></figcaption>
 </figure>IRSWASHINGTON — The Internal Revenue Service <a href="https://www.irs.gov/newsroom/irs-to-recalculate-taxes-on-unemployment-benefits-refunds-to-start-in-may">will begin issuing refunds</a>
 this week to eligible taxpayers who paid taxes on 2020 unemployment 
compensation that the recently-enacted American Rescue Plan later 
excluded from taxable income.The IRS identified over 10 million taxpayers who filed their tax 
returns prior to the American Rescue Plan of 2021 becoming law in March 
and is reviewing those tax returns to determine the correct taxable 
amount of unemployment compensation and tax. This could result in a 
refund, a reduced balance due or no change to tax (no refund due nor 
amount owed).These corrections are being made automatically in a phased approach, 
easing the burden on taxpayers. The first phase is underway and includes
 the simplest returns. The next phase will include the more complex tax 
returns which the IRS anticipates will take through the end of summer to
 review and correct.The first phase of adjustments is being made for single taxpayers who
 had the simplest tax returns, such as those filed by taxpayers who did 
not claim children or any refundable tax credits.The IRS will issue refunds resulting from this effort by direct 
deposit for taxpayers who provided bank account information on their 
2020 tax return. If valid bank account information is not available, the
 refund will be mailed as a paper check to the address of record. The 
IRS will continue to send refunds until all identified tax returns have 
been reviewed and adjusted.These refunds are subject to normal offset rules, such as past-due 
federal tax, state income tax, state unemployment compensation debts, 
child support, spousal support or certain federal nontax debts (i.e., 
student loans). The IRS will send a separate notice to the taxpayer if 
the refund is offset to pay unpaid debts.The IRS will send taxpayers a notice explaining the corrections, 
which they should expect within thirty days of when the correction is 
made. Taxpayers should keep any notices they receive for their records. 
Taxpayers should review their return after receiving their IRS 
notice(s).Correction to any Earned Income Tax Credit (EITC) without qualifying 
children and the Recovery Rebate Credit are being made automatically as 
part of this process. However, some taxpayers may be eligible for 
certain income-based tax credits not claimed on their original return, 
such as the EITC for their qualifying children. If so, they should file 
an amended tax return if the revised adjusted gross income amount makes 
them eligible for additional benefits.More complex corrections will begin upon the completion of the first 
phase and involves couples filing as married filing jointly.Unemployment compensation is taxable income. The American Rescue Plan
 excludes $10,200 in 2020 unemployment compensation from income used to 
calculate the amount of taxes owed. The $10,200 per person exclusion 
applies to taxpayers, single or married filing jointly, with modified 
adjusted gross income of less than $150,000. The $10,200 is the amount 
of income exclusion, not the amount of the refund. Refund amounts will 
vary and not all adjustments will result in a refund.The legislation also suspends the requirement to repay excess advance payments of the <a href="https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics">Premium Tax Credit (excess APTC)</a>.
 If a taxpayer paid an excess APTC repayment amount when they filed 
their 2020 return, the IRS is also refunding this amount automatically. 
If the IRS corrects the taxpayer's account to reflect the unemployment 
income exclusion, the excess APTC amount that the taxpayer paid will be 
included in that adjustment. The IRS is also adjusting accounts for 
those who repaid excess APTC but did not report unemployment 
compensation on their 2020 tax return.Taxpayers who have not yet filed a tax return should follow the <a href="https://www.irs.gov/forms-pubs/new-exclusion-of-up-to-10200-of-unemployment-compensation">guidance for Forms 1040 and 1040-SR</a>, which details how to exclude unemployment compensation.<h2>For additional information</h2><ul>
 <li><a href="https://www.irs.gov/newsroom/tax-treatment-of-unemployment-compensation">Tax Treatment of Unemployment Compensation</a></li><li><a href="https://www.irs.gov/newsroom/2020-unemployment-compensation-exclusion-faqs">Unemployment Compensation Exclusion FAQs</a></li><li><a href="https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics">Tax Year 2020: Requirement to repay excess advance payments of the Premium Tax Credit is suspended</a></li>
 </ul>

IRS begins correcting tax returns for unemployment payments