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Taxes on Unemployment Pay Corrected 

EraserThe Internal Revenue Service has completed final corrections who overpaid tax on unemployment compensation received in 2020. About 14 million returns were corrected.

The IRS said this month that the refunds totaled $14.8 billion for an average of $1,232 refund.

The move came because of the impact of The American Rescue Plan Act of 2021, which became law in March 2021. That law  excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations (up to $10,200 for each spouse if married filing joint). The threshold for individuals and married couples was modified adjusted gross income of less than $150,000

The IRS decided to review Forms 1040 and 1040-SR that were filed prior to the law's enactment for those who had already reported unemployment compensation as income.

Many of the adjustments included corrections to the following credits: Earned Income Tax, Recovery Rebate, Additional Child Tax, American Opportunity Tax, Premium Tax and  Advance Premium Tax Credit.

Bob Scott
Bob Scott has provided information to the tax and accounting community since 1991, first as technology editor of Accounting Today, and from 1997 through 2009 as editor of its sister publication, Accounting Technology. He is known throughout the industry for his depth of knowledge and for his high journalistic standards.  Scott has made frequent appearances as a speaker, moderator and panelist and events serving tax and accounting professionals. He  has a strong background in computer journalism as an editor with two former trade publications, Computer+Software News and MIS Week and spent several years with weekly and daily newspapers in Morris County New Jersey prior to that.  A graduate of Indiana University with a degree in journalism, Bob is a native of Madison, Ind
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