I hope you have managed to stay safe and well! We focus on resolving tax issues in Prince William County and throughout the lower Northern Virginia area.

Currently, the IRS is issuing refunds automatically to taxpayers who claimed unemployment benefits on their taxes, but happened to file their returns before the unemployment exclusion was available (Joe Biden signed into law via the American Rescue Plan). Unfortunately, many states aren’t being so diligent and generous, as automatically recalculating taxes. Meaning you may need to file an amended tax return to receive the benefit you’re owed.

To recap:  President Joe Biden signed a bill on March 11 — about a month into tax season. Part of the $1.9 trillion Covid relief measure waived federal tax on up to $10,200 of unemployment benefits collected last year, per person. (The maximum is double for a married couple.)  To be clear, about  a dozen states are not offering the federal tax break on unemployment benefits, meaning workers still have state tax liability (CO, MN, NY, NC to name a few).

Situations vary by state, but a good portion of the states that offer the break on unemployment benefits (Virginia being one of the states that has chosen to follow the federal law) may not issue the automatic refunds. There are even some states that have not decided on the issue, and have said that they will not decide until after the due date of the returns.  These states are encouraging taxpayers to file the returns including the benefits, or file extensions until the matter becomes settled.

If you are one of the individuals from this tax season, who is confused about certain aspects of the new legislation, or just feel as though you would at least like to discuss mitigating your tax bill and the IRS’s impact in your life. Feel free to contact us in regards to our Tax Representation/Consulting Services, as well as our potential tax planning and savings ideas. https://brtaxaccountant.com/