2021 – 05/15 The IRS is reviewing 2020 tax returns of eligible taxpayers who reported unemployment compensation but didn’t claim the unemployment compensation exclusion provided by the American Rescue Plan Act (ARPA). Individuals who paid taxes on unemployment benefits that should have been excluded from income will begin receiving refunds the week of May 17. Generally, gross income includes unemployment compensation. But for 2020, individuals can exclude from income up to $10,200 of unemployment compensation ($10,200 per spouse for married couples filing jointly). Refunds are being issued because 10 million-plus taxpayers filed returns reporting unemployment benefits before the ARPA was enacted.

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