The IRS has completed its final corrections to the tax year 2020 accounts for taxpayers who overpaid their taxes on unemployment compensation they received in 2020.
The American Rescue Plan Act of 2021 excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations (up to $10,200 for each spouse if married filing jointly).
To ease the burden on taxpayers and avoid concerns about extra complications for tax preparers, the IRS took steps to review Forms 1040 and 1040-SR filed prior to the law’s enactment to identify taxpayers who had already reported unemployment compensation as income and were eligible for the correction.
Some taxpayers received tax refunds, but others had the overpayment applied to taxes due or their other debts. In all, the IRS corrected approximately 14 million returns, generating nearly 12 million refunds totaling $14.8 billion. Read more.