WASHINGTON—Unemployed workers likely won’t need to file amended tax returns to take advantage of a new federal tax exemption for jobless benefits, the head of the Internal Revenue Service said Thursday.
IRS Commissioner Charles Rettig told lawmakers on a House panel, “We believe we will be able to monitor and we will be able to announce that individuals will not have to file amended returns to be able to take the exclusion for the $10,200 per person.”
Mr. Rettig said officials hoped to make a formal announcement “in the near future.”
The $1.9 trillion Covid stimulus package exempts the first $10,200 of 2020 unemployment benefits from income for households that made under $150,000. The move, which came roughly a month after the tax filing season began, will affect the returns of approximately 40 million Americans and save them about $25 billion.
The change threatened to complicate an already messy tax filing season, which has been disrupted by the effects of the coronavirus pandemic and the late tax-law changes.
“We’re sensitive to the situation people are in,” Mr. Rettig said. “We believe that we will be able to automatically issue refunds associated” with this new exemption.
He urged taxpayers not to resubmit their returns if they had already filed them until the agency issues additional guidance on the new legislation. For eligible taxpayers who already received refunds, the IRS will go back and issue a second refund associated with the new tax exemption, he said.
The agency said Wednesday that it was delaying the main April 15 tax filing deadline until May 17 to give taxpayers and accountants some breathing room.
Mr. Rettig said Thursday that the IRS provided that extension for individual filers and their 2020 taxes and not for those filing first-quarter estimated taxes because he was concerned that well-advised high-income taxpayers and business owners would take advantage of extra time.
Mr. Rettig said the delayed tax-filing deadline will affect the agency’s ability to implement periodic payments of the expanded child tax credit created in the relief law. That is because the same people who handle the filing season’s computer programming also need to work on this new system.
“Many of these people haven’t slept since last March,” he said.
Mr. Rettig said he was hopeful that the agency would be able to make monthly payments. To get the money, he said, households will need to have tax returns on file with the IRS. The agency will be doing outreach to make sure low-income households are aware of the new program and the requirements.
He said that the IRS had processed roughly 66 million returns by March 12, and that it had issued 42 million refunds of approximately $126 billion.
—Richard Rubin contributed to this article.
Write to Kate Davidson at [email protected]
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Appeared in the March 19, 2021, print edition as ‘IRS Says Refiling Tax Returns Likely Unnecessary.’
