People who file an amended return could save anywhere from $1,000 to $2,200 on their taxes, MarketWatch estimates. Make sure to consult with a tax professional before filing the amended return if you have any questions or are unclear about the process. Those amending their income to remove unemployment payments, for instance, would focus on lines 1 through 23. You’ll need to complete columns A, B and C for the lines that relate to the changes you’re making.Įnter the original amount you reported in column A, the change in column B and the corrected amount in column C. The IRS has made it possible this year to file the amended return electronically as well as by mail.įind: What Are the 2020-2021 Federal Tax Brackets and Tax Rates? When the time comes to file an amended return, taxpayers can do so online using IRS Form 1040-X. “It’s in everyone’s interest to get this sorted quickly,” he told MarketWatch. He said it also allows tax software companies to update their systems based on the tax law change. Robert Kerr, a Washington, D.C.-based IRS enrolled agent and tax consultant said waiting can give the IRS time to figure out how to handle these returns, MarketWatch reported. MarketWatch reports that 55.7 million tax returns have already been filed as of March 5, which means many Americans will need to file amended returns that could result in larger refunds or smaller tax bills.įiling an amended return is not a difficult process, but tax experts have advised people to wait a bit longer to file the amended return in case the IRS finds a way to make the adjustments automatically. See: If You Get a Stimulus Check, How Will You Use It? Take Our Pollįind: Don’t Miss These 4 Tax Breaks in the $1.9 Trillion Stimulus Plan The 10,200 exemption applied to individual taxpayers who earned less than 150,000 in modified adjusted gross income. According to the Internal Revenue Service, the average refund is worth 1,265 for this weeks batch of payments. Typically, unemployment is considered taxable income at your regular tax rate, which depends on your tax bracket based on income. The 10,200 figure is the amount taxpayers can exclude from their earnings, not the amount of the refund. Under the American Rescue Plan signed into law Thursday, the IRS will make the first $10,200 in unemployment benefits from 2020 tax-free. IRS tax refunds to start in May for 10,200 unemployment tax break: Here's what you need to know The IRS will start refunding money to people in May who already filed their returns without claiming. But the strategy may have backfired this year, as early filers who paid taxes on their federal unemployment benefits missed out on an important tax break. Tax experts often advise taxpayers to file their taxes early to expedite their refund or to be in a better position to pay their tax bill by April 15. EXTREME-PHOTOGRAPHER / Getty Images/iStockphoto
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