If you received unemployment benefits last year, you probably have a bigger tax refund coming your way.
That's great news for the tens of millions of people who were out of work due to the pandemic in 2020 and who could now get an additional $1,000-$5,000 tax refund later this spring.
Under the latest stimulus package, signed by President Biden and Congress in mid-March, you will not be taxed on the first $10,200 of unemployment pay received in 2020.
That could mean a few thousand dollars, if you were out of work for several months, with the exact amount depending on your tax bracket and several other factors.
Let's say you received $7,000 in unemployment benefits, which Uncle Sam then taxed you $1,200. You should get a refund for that $1,200 later this spring.
If you earned more than $150,000 last year, however, you do not qualify for this tax break. But most people who received unemployment do not fall into this high-income category.
More confusion and delay for taxpayers
But the bad news is that this further mucks up an already troubled and delay-plagued tax season.
So we'll put this in the doesn't that stink file for that reason.
Why couldn't Congress have come up with this break a few months earlier?
Millions of people had already filed their federal taxes when this break was passed in March. They didn't know it was coming, and had no way of claiming it.
In addition, states now have to decide if they will follow suit and refund the state income tax they took out of unemployment benefits.
Kiplinger's Personal Finance has put together a state-by-state guide to whether you may see an additional state refund.
But this is important: do not file an amended return.
The IRS says your best bet is to do nothing, and they will send you a bigger refund in the coming weeks if you deserve it.
That way, you don't waste your money.
__________________________
Don't Waste Your Money" is a registered trademark of Scripps Media, Inc. ("Scripps").
Like" John Matarese Money on Facebook
Follow John on Instagram @johnmataresemoney
Follow John on Twitter (@JohnMatarese)
For more consumer news and money saving advice, go to www.dontwasteyourmoney.com
