- At least seven million people will likely qualify for a tax refund on unemployment benefits.
- The American Rescue Plan waived federal tax of up to $10,200 of unemployment benefits.
- Taxpayers qualify if their modified adjusted gross income was less than $150,000.
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Millions of people will likely qualify for a tax break on up to $10,200 of unemployment benefits, a Treasury report suggests.
The $1.9 trillion American Rescue Plan, which Joe Biden signed in March, waived federal tax of up to $10,200 of unemployment benefits, per person, collected in 2020. If a person paid taxes on jobless benefits before the tax break went into effect, they will likely be owed a tax refund by the IRS.
Taxpayers whose modified adjusted gross income was less than $150,000 qualify for the tax break.
According to the Treasury report, about 7.3 million tax returns processed by the IRS in early March will likely qualify this month.
To date, the IRS hasn’t explained what form the unemployment tax return will arrive in.
The process will, however, take part in two stages. CNBC reported that married couples who file a joint return must generally wait until phase two, according to an IRS official. This is because calculating their refund is more complex.
“Once taxpayers receive their automatic payments in the coming weeks and months it may be a good idea to check in with a trusted tax pro to make sure the IRS computed their amount correctly,” said Mark Steber, chief tax officer for Jackson Hewitt, told CNET.