Last week, IRS Commission Charles Rettig provided written and oral testimony, which included discussions on the newly passed legislation exempting the first $10,200 of unemployment benefits from taxable income for filers under certain income levels. The Commissioner asked those taxpayers entitled to this new exclusion NOT to file an amended return to request a refund if they already filed their 2020 tax returns. The Commissioner stated he expects the IRS to handle this change to the 2020 tax law and process the refunds without the necessity of filing amended returns.
The following article explains the IRS plans for automatic refunds of taxes paid on these benefits for returns already filed. We will continue to monitor the situation and provide the final IRS procedures details when released. Please note, most states have not yet addressed the non-taxable unemployment benefits or the new filing deadline of May 17, 2021. This may cause a delay in completing your return until the state filing can be sorted out.
