The IRS has just released a statement saying that they will begin re-calculating tax returns with unemployment compensation in May and paying adjusted refunds or applying the adjusted amount to previous tax debts. The IRS will process taxpayers claiming the $10,200 exclusion first, and later they will process married filing joint returns that are claiming the $20,400 exclusion and other more complicated situations.
If you pay now as agreed, the IRS will eventually refund you the correct amount. If you don’t pay no, it is possible that the IRS computers could automatically assess a late payment penalty after the May 17 filing deadline, even though you will eventually be owed a refund whenever the IRS gets around to your particular tax return. It would be nice to think that the IRS will not charge the penalty in your situation because you are eventually due a refund. In the worst case scenario, I think you would be able to successfully appeal any penalty, but it might be more paperwork.
If I were in your situation, I would probably not pay the tax due. But I am not an attorney and I am not giving you legal or tax advice.
Also understand, the IRS will not adjust your state tax return. It may still be necessary to file an amended state tax return if your state conforms to the new federal exclusion and if your state does not automatically issue refunds. But I would take a wait and see on that, until your state as a chance to make an announcement. (Of course, this is a non-issue in those states which already do not tax unemployment.)
