Thank you for contacting TurboTax Live! and thank you for your question about the IRS and your AGI!!!
We see - from your question - that you file your 2020 tax return, prior to the Passage of the American Rescue Plan - which reduced your unemployment compensation from your taxable income by 10,200.00.
We see that you had UI benefits since 3/2020, and that you DID have withholding for Federal taxes - during the whole year.
Even so, you had a tax due and IRS took the $352.00 from my checking account, based on your direct deposit detail that the IRS has on file for you and your account.
We looked into this for you - and based on a check of our TurboTax Resources and the IRS Resources, we learned the folllowing:
When will I get my additional unemployment refund from the IRS?
According to the IRS, they will send payments in two phases:
- Phase 1: The IRS will adjust returns for taxpayers eligible for up to $10,200 exclusion. Payments for phase 1 started the week of May 14.
- Phase 2: The IRS will adjust returns for those married filing jointly taxpayers who are eligible for the up to $20,400 exclusion and others with more complex returns.
The IRS issued millions of refunds the first week of June and plans to issue the next set of refunds sometime in mid-June. The IRS will continue to review returns and process corrections during the summer. The IRS is reviewing returns in order from the simplest returns and then to more complex returns.
Taxpayers will receive letters from the IRS generally within 30 days of the adjustment informing them of what kind of adjustment was made and the amount.
How will I receive my additional unemployment refund amount from the IRS?
The IRS will issue refunds resulting from this unemployment income relief by direct deposit for taxpayers who provided bank account information on their 2020 tax return.
If valid bank account information is not available, the refund will be mailed as a paper check to the address of record. The IRS will continue to send refunds until all identified tax returns have been reviewed and adjusted.
These refunds are subject to normal offset rules such as past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support or student loans. The IRS will send a separate notice to the taxpayer if the refund is offset to pay unpaid debts.
How do I know if I am now eligible for additional deductions and credits, and what do I do to get them?
It’s a bit tricky.
The IRS will adjust your return and the amounts for any deductions and credits you claimed on it. For example, say you claimed the Earned Income Tax Credit (EITC) on your return. And because the new unemployment exclusion changed your income level, you would now be eligible for an increase in EITC amount. The IRS would adjust your return for you and send you the additional refund amount with your additional unemployment benefits. You are all set.
The IRS is also making corrections to Earned Income Tax Credit, Premium Tax Credit and the Recovery Rebate Credit since taxpayers may be eligible for these credits with the $10,200 income exclusion.
However, say you were not originally eligible for the EITC on your return, but now, because the exclusion changed your income, you are eligible for the EITC. You may need to amend your return to claim that new credit based on your tax situation:
- The IRS can adjust tax returns for those who are single with no children and the exclusion makes them eligible for EITC.
- Taxpayers who have qualifying children and become eligible for any new benefits once the exclusion is calculated may have to file an amended tax return to claim new benefits.
If you chose not to amend your return, you’d only get the additional unemployment benefits automatically from the IRS and would miss out on additional money you’d be eligible for.
The IRS can also adjust tax returns that already include EITC and qualifying children. If you filed with TurboTax, check your inbox. We sent you an email to help you understand how all this affects you and with instructions on what to do.
How do I know how much unemployment income I received?
When it’s time to file your taxes, you will receive Form 1099-G, which will show the amount of unemployment income you received. Form 1099-G will also show any federal taxes you had taken out of your unemployment pay. You are now entitled to exclude the first $10,200 of federal unemployment income from paying any taxes.
As you already filed your 2020 tax return, and according to the IRS guidance - you do not need to do anything to get the additional tax refund of $352.00.
The IRS announced that they will automatically adjust your return and send any additional refund amount directly to you.
However, some people may now be newly eligible for additional deductions and credits not already included on the original tax return. This seems to apply in the facts and circumstances that you described in your question. In these cases, you will likely want to amend your return to claim these additional dollars.
Also, if this is causing some form of financial hardship for you and your family, you may want to contact the IRS Taxpayer Advocate Service (TAS) - using IRS Form 911 - and fax the IRS Form 911 to the state-specific IRS Tax Advocate for your state (info appears on Page 4 of the IRS Form 911), to obtain additional relief - if in fact this is causing a financial hardship.
We trust and hope that this resource detail assists you in resolving your additional tax refund that you claimed, that has not yet been received, and thank you for contacting TurboTax Live!
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