The coronavirus pandemic has eased substantially across the nation as the economy opens up. But the tax ramifications from it are still reverberating.
Among the …
The coronavirus pandemic has eased substantially across the nation as the economy opens up. But the tax ramifications from it are still reverberating. Among the changes: The Internal Revenue Service has started to issue refunds to millions of Americans in two separate areas – unemployment benefits and child tax credits. The changes are tied to unusual provisions adopted in part to relieve the financial stress caused by the pandemic. The IRS also is reminding self-employed people that they might have a deferred tax payment due later this year — also courtesy of COVID-19 relief legislation. The IRS has started to issue refunds averaging $1,265 to nearly 4 million taxpayers who received unemployment compensation last year. Others won’t get payments but will benefit from adjustments lowering their outstanding tax bills. Unemployment benefits normally are taxable, but coronavirus-relief legislation allowed lower- and moderate-income households to receive up to $10,200 in jobless aid on a tax-free basis. This exclusion applied for individuals and married couples with modified adjusted gross income below $150,000. The American Rescue Plan was enacted in March, after millions of Americans already had filed their 2020 returns, necessitating an adjustment that the IRS mostly made without requiring action by affected taxpayers. Refunds by direct deposit began July 14, and the IRS started sending paper-check refunds on July 16.
