A large portion of the 12 million refunds result from a change in how unemployment insurance taxes were calculated.
According to the tax authority, the Internal Revenue Service recently finished fixing errors on about 14 million tax returns for 2021, resulting in an additional 12 million refunds.
Many of the refunds are the result of a change in how unemployment insurance is taxed. The American Rescue Plan of 2021, which went into effect in March 2021, exempted up to $10,200 in unemployment compensation from taxation in 2020. Individuals and married couples earning less than $150,000 in modified adjusted gross income were exempt.
However, the issue of those who filed taxes prior to the plan’s passage arose, resulting in them overpaying for jobless benefits received in 2020. The IRS announced that it would examine returns submitted before the law’s passage to find taxpayers who had reported unemployment benefits and qualified for a correction.
Other corrections included changes as a result of the American Opportunity Tax Credit, Additional Child Tax Credit, Recovery Rebate Credit, Premium Tax Credit, and Advance Premium Tax Credit.
According to the IRS, 12 million refunds totaling $14.8 billion have been issued as a result of the correction of approximately 14 million returns. The typical refund was $1,232.
Taxpayers who are affected have received letters informing them of the corrections, and they are advised to keep them with their tax records.
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IRS fixed 14 million tax returns, with a $1,232...
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