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At least 7 million people are likely to be eligible for tax refunds for unemployment benefits they received last year, according to a new report.
The American bailout plan, which President Joe Biden signed in March, waived federal taxes on up to $ 10,200 per person in unemployment benefits collected in 2020.
Taxpayers qualify if their modified adjusted gross income was less than $ 150,000. This limit is the same for all taxpayers, regardless of their registration status.
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Around 7.3 million tax returns processed by the IRS in early March appear to qualify under these rules, according to a financial report released on Friday.
Those returns reported total unemployment benefits of $ 87 billion, according to analysis. They accounted for almost 99% of all returns processed that were reported as unemployed.
Reimbursement of unemployment tax
Many of these taxpayers are likely to owe a refund from the IRS. Their tax returns were processed before the unemployment tax break went into effect on March 11th – meaning they likely overpaid their federal tax bill.
So far, the IRS has not indicated how many taxpayers are expected to receive a refund. The agency did not respond to a request for comment on the statistics in the report.
The IRS will begin issuing refunds in May and will continue paying them through the summer. (The agency may apply the refund to other outstanding taxes owed as well.)
The Treasury Watchdog report analyzed the tax returns processed by the IRS on March 4th. The registration season started on February 12th and ends on May 17th.