Does the IRS Still Owe You Money From Your 2020 Tax Return? How To Find Out and Claim It
Tax season for 2022 returns has officially begun as of this week, but 2020 returns are also in the news again. The IRS recently let Americans know they some may still be owed money from that time period, and offered guidelines on how to claim it.
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It all hinges on the American Rescue Plan Act that was initiated as part of pandemic-era financial support. Part of the plan allowed millions of people on unemployment benefits the chance to deduct up to $10,200 from those payments (or $20,400 for couples filing jointly), if they made less than $150,000 that year, according to the IRS.
Timing of the launch was an issue, however, since the one-time relief measure was announced in March 2021 — after 76 million people had filed their 2020 returns, according to USA Today.
The IRS made automatic corrections for many of these individuals, but has since released information that they are done with that process. Anyone who believes they should have received this $10,200 tax deduction will now need to file an amended return to correct the issue and receive the money they are owed. The IRS has not provided a figure as to how many people this affects.
CPAs are warning, however, that the process to submit a 1040-X amended return is not the simplest for laypeople to do (and cannot be done with the IRS Free File program). As such, it might necessitate the assistance of a certified tax professional to file correctly.
That’s because it’s not just as simple to take off the credit from the adjusted gross income. “You have to consider what else is in the return,” Jackson Hewitt representative Mark Steber told USA Today. As Steber explained, the adjusted gross income amount always affects deductions and credits you may have taken initially — such as the Earned Income Tax Credit and Expanded Child Tax Credit. “You might qualify for some of those now,” he said. State income taxes might need to be refiled as well.
It may also take some time (months, in some cases) to receive the refund, as an IRS agent will have to manually process the amended return. However, there could be some serious money on the line that is worth waiting for — USA Today estimated that, on average, refunds have come out to around $1,232. In general, taxpayers have up to three years to file an amended return for it to be viable, so you’d need to do so for 2020 as soon as possible.
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The good news is that many people are already using a professional tax preparer for their 2022 returns and 2020 amendments are something that can be added on to the process. If you are not currently doing so, it is always wise to consult with a tax expert prior to filing your taxes, particularly if they are complex in any way.
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This article originally appeared on GOBankingRates.com: Does the IRS Still Owe You Money From Your 2020 Tax Return? How To Find Out and Claim It
