HOUSTON – If you collected unemployment in 2020, you could get a bigger tax refund. The American Rescue Plan is waiving federal taxes on a portion of your unemployment benefits. Usually, when you collect unemployment, you have to pay federal income tax on that money. This year, you do not have to pay taxes on $10,200 of those benefits if you earned less than $150,000. Any money you received above $10,200 is taxable.
The relief was passed on March 11. By that time, some people had already filed their taxes.
Mary Bynum emailed consumer expert Amy Davis, writing, “I collected unemployment in 2020 and filed my return and received my refund in mid-February. The way I figure it, I would have an additional $1,700 refund which I need to pay bills.”
She wants to know how and when she will get this extra money.
The IRS says taxpayers should not file an amended return. Instead, the agency plans to review already processed returns to determine who qualifies for the exclusion and automatically issue refunds. Those refunds will begin going out in May.
If you have not filed your taxes yet, you can now. Most tax software has been updated to include the tax credit. On the IRS website, the agency explains what forms you should use and file if you are doing your taxes yourself to get the tax break.