Hello everyone and welcome to this episode of Ignition Time.
My name is Dr. Nitin Chhoda. The good news is we have received some new guidance from the IRS
as it pertains to the federal tax waiver on the first $10,200 in unemployment benefits received in
2020. So folks this is brand new information that has just come in from the IRS. The IRS has said
that they will now automatically process refunds for those individuals who may have paid federal
income taxes on the unemployment benefits. In other words, those who already filed their
taxes. So this is extremely encouraging. You'll see this article on your screen from Bloomberg,
and by the way I'll provide you with a link to all of these articles. This one is in fact there was
another CNBC article as well which I can show you right now. I'll provide you with a link to
all of these articles in the description section below. But folks the good news is
that the IRS is essentially going to issue these refund payments if you will of tax over payments
automatically. So this is a good thing because initially there was some talk about potentially
having to file amended returns but the IRS is saying, hey, you don't need to do that
anymore. So the new law as you know makes the first $10,200 of unemployment benefit payments
tax free. Now traditionally unemployment payments have been taxed as income but the first $10,200
of unemployment payments in the year 2020 for households making less than $150,000 a year are
going to be tax free per recipient. In other words if they're two recipients then we're
talking $10,200 times 2 which is essentially you know $20,400 which is pretty incredible.
So some taxpayers unfortunately have already paid taxes on jobless benefits so the update is that
the internal revenue service will automatically process refunds for those individuals who paid
taxes on the unemployment benefits before congress passed a law making those payments tax-free. So
this is actually good news. And this automatic refund will mean that many many many recipients,
millions of our fellow Americans who did end up filing taxes and trying to stay ahead of the curve
they will actually get a refund if you've already filed your tax returns for 2020. You will not need
to take extra steps to reclaim those taxes that you paid but you no longer owe because those taxes
that you paid which you no longer owe because the first $10,200 in unemployment benefits for the
year 2020 for households making up $250,000 a year are not taxed. So taxpayers who have yet to submit
their returns have until May 17 to file. So this was a note everyone from the commissioner of the
IRS Chuck Reddick. He said do not file an amended return at this time. We believe that we will be
able to handle this on our own. We believe that we will be able to automatically issue refunds
associated with the $10,200. So this is very encouraging. In fact, let me actually show you
folks a tweet from the IRS. The IRS strongly urges taxpayers to not file amended returns
related to the new legislative provisions in the American Rescue plan until the agency
issues additional guidance. So it's very clear folks they're saying do not
do not file an amended return if you've already filed your taxes the irs will soon share more
details so this is this is encouraging because this means that the irs is going to try and handle
handle this on their own but i want to be clear the irs is completely overloaded they have to send
out stimulus checks they have to deal with the earned income tax credit the child tax credit and
you know there's a lot that they have to do in addition to the ten thousand two hundred
dollars plus you know this is tax time uh and even though they've delayed it by a month they are they
are completely overloaded and the unemployment benefit uh the the the federal tax exemption
on the first ten thousand two hundred dollars in unemployment benefits basically came in the middle
of the tax filing season and that is one of the seven that is one of several reasons why
the irs said they had to push back the april 15 deadline for individual taxpayers to may 17th
and there was a lot of pressure on them to actually do that now keep in mind if you file
quarterly income taxes you still have to do that by may 15 and so that you know that doesn't change
so the april 15 due date for first quarter estimated tax payments does not change and
the agency will uh not delay other deadlines so keep in mind that you know according to the irs
extensions cannot become a pattern and he said the delays for accommodation is an accommodation
for the most vulnerable so keep in mind that this later due date everyone will also give
the irs time to catch up with payments because like i said they are completely overloaded
and the irs has received about has received about 66 million refunds uh as of march 12th which
is a decline from 2020 so basically what this means is that the irs is completely overloaded
and you know they they basically have to they basically have to do a lot more work which is
the bottom line and unfortunately there's fraud because of all the unemployment benefits emerging
and keep in mind that that there is a form 10 40. i have covered this in other videos
there's an there's a form 10 40 on the individual tax return where you can take advantage of a
recovery rebate credit in case you didn't receive the full stimulus check with the first 1200
over the second six hundred dollars so that's the mechanism for you to claim any missing checks or
any incomplete or smaller checks and what you may have would what you may have been owed so keep
that in mind as well the recovery rebate credit on form 1040 you may want to talk to an accountant
about this and the irs is right now in the middle of sending out these millions of 1400
uh 1400 check stimulus payments so they are completely overloaded now they have said that
they've sent out 90 million payments worth about 242 billion dollars keep in mind that well over
400 billion dollars has been set aside by way of stimulus checks so the irs will basically try to
match 2020 returns with payments and they said that those who as a result of their 2020 returns
had a child or a dependent if they find that in the 2020 returns then they're actually going to
send out additional money so that is that is also interesting and they also said that again they had
to delay the they had to delay the tax filing deadline to create a system and to create they
need enough time to deal with the with the child tax credits so keep in mind that this stimulus
will also increa increase the child tax credit and directed the irs to start sending out payments
starting in july rather than having filers claim it as one lump sum at tax time so here's the
bottom line folks the irs is completely overloaded and they are suggesting that you give them time
to automatically issue you your refund of the unemployment benefit tax payments so that is
where things stand right now everyone let me know in the comment section below whether you
have any questions i understand how important this money is i understand how important the
refund is because the refund for the ten thousand two hundred dollars of federal tax overpayments in
case you filed your tax returns already is is very important to many of our viewers and subscribers
if you have not filed your taxes just wait till the irs issues enough guidance and if you need
to to inform the irs said hey i didn't get my full 1200 or i didn't get the 600 or i was supposed to
get it for a child or a dependent and i never got it keep in mind adult dependents were not eligible
for the first or the second stimulus check which goes back to 2020 tax returns because those were
issued in 2020 then you can list that on the recovery rebate credit section of irs form 1040.
so definitely there's check out another video on our channel where you can learn about
how what you need to know in order to be able to make sure you get the full 1400
stimulus check but as far as this video is concerned the good news is the irs will issue
the ten thousand two hundred dollar overpayments automatically there's really nothing you need to
do and hopefully this was encouraging for our viewers and subscribers thank you so much for
watching i hope you learned something new my name is dr nitin showdown with ignition time
i appreciate you please click the like button please subscribe please enable notifications
and i'm looking forward to seeing you in the next episode of ignition time take care bye
so
you