MENU ☰

Teipen Logo

There may be a 2020 IRS unemployment tax refund headed your way

Posted on January 30, 2023

The IRS just completed their review of tax year 2020 accounts for taxpayers who overpaid their taxes on unemployment compensation they received in 2020. If you received unemployment in 2020, you could be included in the more than 12 million IRS refunds.

Here’s the backstory:

  • The American Rescue Plan Act of 2021, which became law in March 2021, excluded up to $10,200 in 2020 unemployment compensation from taxable income calculations (up to $10,200 for each spouse if married filing joint).
  • The exclusion applied to individuals and married couples whose modified adjusted gross income was less than $150,000.
  • To ease the burden on taxpayers, the IRS took steps to review the Forms 1040 and 1040SR that were filed prior to the law’s enactment to identify taxpayers who had already reported unemployment compensation as income and were eligible for the correction. The IRS determined the correct taxable amount of unemployment compensation and tax.
  • Some taxpayers received refunds, while others had the overpayment applied to taxes due or other debts. In some cases, the exclusion only resulted in a reduction in their adjusted gross income.
  • The IRS mailed a letter to these taxpayers to inform them of the corrections. Taxpayers should keep that letter with their tax records.

The IRS corrected approximately 14 million returns. This resulted in nearly 12 million refunds totaling $14.8 billion, with an average refund of $1,232.

The 2020 adjustments included corrections to:

  • Earned Income Tax Credit
  • Recovery Rebate Credit
  • Additional Child Tax Credit
  • American Opportunity Tax Credit
  • Premium Tax Credit
  • Advance Premium Tax Credit

What if you think you might be eligible?

For more information about this, including eligibility requirements, read the 2020 Unemployment Compensation Exclusion FAQs on IRS.gov.

You can also view your 2020 tax records on your Online Account or request that a 2020 tax account transcript be mailed to you.

If you believe you are eligible for the unemployment compensation exclusion and your account was not corrected by the IRS, you can file an amended 2020 tax return to claim the exclusion and any applicable non-refundable or refundable credits impacted by the exclusion.

Your Teipen Group CPA can help you determine your eligibility and help you apply for any compensation due.