If it’s above that number, subtract the $10,200/$20,400 from the adjusted gross income amount.įrom there, a taxpayer can see if they fall under the income limits to claim the EITC and determine whether to press ahead. If the number is below $10,200 (or $20,400 for joint filers), just subtract that number from your adjusted gross income. That’s the field for unemployment compensation. So how can a person know if they are in striking distance of the credit if they didn’t claim it? Start with some simple math, Speidel said.įirst, find Line 11 on the 1040 that’s been submitted to the IRS. (A taxpayer can know for sure if they have already claimed the EITC by seeing if Line 27 has been completed in their Form 1040.) “How can a person know if they are in striking distance of the credit if they didn’t claim it? Start with some simple math. A crucial bit of extra cashĪnyone who wants to access those credits based on their newly-reduced adjusted gross income will have to file an amended income tax return, the federal tax collection agency said. Though the IRS said it would automatically adjust returns based on the tax exclusion, it said it would not tweak those returns to apply for new tax credits if the underlying return didn’t already seek those credits. The IRS estimates on the 5.4 million taxpayers eligible for recalculation run through the end of February. The exemption applies to households making under $150,000 a year.Īround the time President Joe Biden signed the plan, approximately 66 million households had already submitted their tax returns, IRS statistics show. The income-tax exclusion is $20,400 for a married couple filing jointly. Unemployment benefits are taxable income, but the $1.9 trillion American Rescue Plan contained a provision saying the feds would not assess income tax on the first $10,200 a person received in jobless benefits. In certain cases, some people could hypothetically rake in around $1,000 to $2,000 extra, based on Speidel’s calculations. “It’s definitely worth just double checking,” said Christine Speidel, a professor and director of the Villanova University Charles Widger School of Law’s Federal Tax Clinic. “The American Rescue Plan said the feds would not assess income tax on the first $10,200 a person received in jobless benefits.
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