Taxpayers who have already filed their 2020 tax returns should not change them to take advantage of tax breaks created by the new $ 1.9 trillion pandemic relief act, Internal Revenue Service agent Charles said Rettig, on Thursday, told lawmakers that the IRS would automatically send refunds to those who qualify.
Mr. Rettig referred to a provision in law at a Congressional hearing that provides tax exemption for the first $ 10,200 in unemployment benefits received in 2020 by unemployed people whose households earned less than $ 150,000.
“We believe we can automatically issue refunds related to the US $ 10,200,” said Rettig.
According to The Century Foundation, around 40 million Americans received unemployment insurance last year.
The tax changes contained in the latest bill passed earlier this month, as well as tax changes in the December bailout package and the rush to pay out payments for economic impact, have put the IRS under heavy pressure. The agency said Wednesday that tax day would be pushed back a month from April 15 to May 17 to give both themselves and taxpayers more time to process returns and refunds.
The Finance Department and the IRS are also engaged in developing new regulations and update systems to reflect other aspects of the March Aid Act.
Treasury officials said at a briefing Thursday that they are working with the IRS to develop a new online portal for prepayments for the expanded child tax credit, which ranges up to $ 3,600 per child under 6 years old and $ 3,000 for children between 6 and 3,000 years provides 17 regardless of whether a family earns enough to pay income taxes.
Taxpayers can use the portal to upload relevant data for mid-year payment adjustments, for example for the birth of a child.
Tax officials also said the department is working on additional guidance on how states can use money included in the relief bill. This includes clarity about how states will have to repay aid if they decide to cut taxes after receiving aid.
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