I filed my taxes before the American rescue plan, so I was charged taxes on my unemployment benefits. I received an email from TurboTax stating that in order to get the tax charged on the unemployment benefits, I had to edit my filed taxes. I did that and it took about $1000 from my bank account instead of receiving the tax I paid from my unemployment benefits. I need help in getting my ~$1000 back and the tax I paid from my unemployment benefits.
Look at your original return and see how much you owed before the change in the tax law.
If you read the letter from the IRS did it say that you owed the $1000 after they gave you the unemployment tax credit.
For example: You filed and owed $2,500 and they credited $1,500 for unemployment credit and you needed to pay the $1,000 left to be paid.
Thank you for contacting TurboTax Live! We see that you have a question - about unemployment and your additional tax refund, that you have not yet received! We thank you for your question!
In reviewing your question, we see that you filed your taxes prior to Congress passing the American Rescue Plan, in March of 2021, so you were charged taxes on your unemployment benefits.
You did receive an email from TurboTax Live! stating that - in order to get the additional tax refund for the now excluded amount of unemployment benefits ($10,200.00) - that you had to amend your tax return as originally filed prior to the ARP.
From your question, it appears that you did file an amended tax return, and after your amended tax return was filed - about $1,000 was debited from your bank account - which was instead of receiving the anticipated tax refund on the excluded amount of unemployment benefits. You expressed needing assistance in getting a refund of the $1,000 that you said was incorrectly debited from your bank account, based on the exclusion of $10,200 of unemployment benefits from your taxable income.
Thank you for your question, and for giving us the opportunity to respond to it!
We checked our resources - here at TurboTax Live! and at the IRS, and here is what we learned:
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.
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.
We trust and hope that this resource detail assists you in resolving your Question, and thank you for choosing TurboTax Live!
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Is there a way I can remove my amanded tax return back to the original one I did so I can get my ~$1000 back? The original one was correct and I will just have to wait for the IRS to send me tax I paid from my unemployment benefits.
Hi there! Thanks for your response! When you say "remove" your amended tax return, I have to ask the question . . . how did you file your amended tax return? Were you able to get the amended tax return filed via e-file on TurboTax Live! or did TurboTax Live! instruct you to mail the amended tax return to the IRS?
It makes a difference in the options and suggestions that I can provide to you, so if you could respond - that would be great.
One way to find out - what the status is of your amended tax return, is to go to the "IRS Transcript Tool" on the irs.gov website (a simple internet search will get you there to the IRS Transcript Tool) - and order an Account Tax Transcript for the 2020 Tax Year. This will allow you to see the progression of your tax return from filing, processing, assessment, and getting your refund, and then where your amended tax return is in that process on the IRS Transcript Tool.
If - in fact - you e-filed your amended tax return for the 2020 Tax Year - that is irrevocable - meaning that you cannot "pull" it back, or otherwise remove it, once it is transmitted to the IRS e-file system from the TurboTax Live! queue for e-file.
One other idea that I have for you - is the IRS Taxpayer Advocate Service for your particular state. Since it appears that not receiving this additional tax refund may possibly be causing you and your family a form of financial hardship - you can express that to the IRS Taxpayer Advocate for your state - and invoke the advocacy assistance of the Taxpayer Advocate Service.
You can find the IRS's Taxpayer Advocate Service (which is also part of the federal government - and assists taxpayers in resolving tax matters with the IRS) - by doing an internet search for IRS Taxpayer Advocate Service, and there will be a map in the middle of the webpage - that you can click on your state - to find the local office near to you! You may also need to fill out IRS Form 911 to invoke the services of the IRS Taxpayer Advocate Service, and it is a fairly simple form, where you can state your concern - as you stated here, and one of the Advocates may be able to assist you in "rescuing" your additional tax refund that you have not yet received!
I really hope this helps, but if you have any additional questions - please feel free to reach out! Also, you can use our TurboTax Live! service to connect with one of our Tax Experts on a scheduled call back to discuss the matter over the phone, and personally with our Tax Experts!