Another IRS deposit may soon hit your bank account

The pandemic has put some in the wallet. As some Americans regain a foothold, financial relief remains a welcome sight for many. As child tax credits are mailed to those who qualify, another tax refund may soon arrive in your bank account.

If you paid taxes on unemployment benefits last year, you may have overpaid. The IRS estimates that nearly 5 million Americans fall into this category.

There are certain conditions attached to it, so you need to check if you are eligible. Here are all the details on the refund and how to verify eligibility.

Here is the backstory

The American Rescue Plan Act of 2021 excluded up to $ 10,200 for individuals and married couples with incomes below $ 150,000. This had an impact on the unemployment benefit calculation of taxable income.

The IRS says direct deposits have already started paying, while paper checks are due to start mailing on July 16. For most people, you don’t need to do anything because the IRS has reviewed the documentation for the 1040 and 1040SR forms.

“Most taxpayers don’t need to take any action, and there’s no need to call the IRS. However, if, due to the excluded unemployment benefit, taxpayers are now eligible for any deductions or credits not claimed in the original return, they must complete a Form 1040-X, Amended US Individual Income Tax Return. , ” the IRS explained in a press release.

What does this mean to you

As the IRS explained, in most cases, taxpayers shouldn’t have to do anything. There are, however, special circumstances where action is required.

You should file an amended return if you:

  • Did not submit a Schedule 8812 with the original return to claim the Additional Child Tax Credit and are now eligible for the credit after excluding unemployment compensation;
  • Have not submitted an EIC Schedule with the original return to claim the Earned Income Tax Credit (with qualifying dependents) and are now eligible for the credit after exclusion from unemployment compensation;
  • Are now eligible for any other credit and / or deduction not mentioned below. Be sure to include any required forms or schedules.

Taxpayers do not need to file an amended return if:

  • Already filed a tax return and did not request exclusion from unemployment; the IRS will determine the correct taxable amount of unemployment benefit and tax;
  • Have an adjustment, due to the exclusion, which will result in an increase in any non-refundable or refundable credits reported on the original return;
  • Did not claim the following credits on their tax return but are now eligible when the unemployment exclusion is applied: payback refund credit, earned income credit with no qualifying dependents, or early premium tax credit . The IRS will calculate the credit and include it in any overpayment;
  • You have filed a joint declaration of spousal declaration, you live in a community property state and you have entered a lower exclusion amount than you are entitled to in Schedule 1, line 8.

Taxpayers will typically receive letters from the IRS within 30 days of the adjustment, notifying them of the type of adjustment made (such as a refund, payment of an IRS debt, or payment clearing for other authorized debts. ) and the amount of the adjustment.

Keep reading

New Podcast: How Billionaires Like Bezos, Musk, and Buffett Pay No Federal Tax

Not sure if you qualify for the child tax credit? Use this quick check to find out

Source link

About Kristina McManus

Kristina McManus

Check Also

This digital banking platform goes the extra mile to improve your financial life

The financial lives of Americans have undergone massive changes since the pandemic-induced mass unemployment and …

Leave a Reply

Your email address will not be published. Required fields are marked *