BUFFALO, N.Y. — Questions about unemployment benefits have been a constant during the pandemic, and many of the latest ones 2 On Your Side has gotten are about taxes.
In March, after a lot of people already filed their 2020 tax returns, as part of the American Rescue Plan, the federal government said you didn't have to pay taxes on up to $10,200 worth of unemployment benefits, or twice that for married people, if your adjusted gross income is below $150,000 a year. That meant the IRS potentially owed more than 10-million taxpayers' money.
Paula S. emailed 2 On Your Side saying, "Wondering when we can expect our refund from unemployment. We paid the taxes... still haven't received a refund."
Those refunds started going out in May.
But, as 2 On Your Side reported last week, some people were getting too much money back. In some cases thousands of dollars too much.
Since 2 On Your Side last spoke with EG Tax's Vice President last week, EG Tax figured out only married couples filing jointly were contacting them about overpayments.
A rep from the software company EG Tax uses says the IRS told them this...
"It was we, we meaning the IRS, couldn't figure out if both spouses were on unemployment, so we automatically calculated as they both were on unemployment, so instead of getting a $10,200 subtraction, they were getting a $20,400 subtraction and that our software company said, well, are you going to be billing these people back for the extra money? And they said, at this time, no. We don't know what we're going to do because we built in for error. If they contact us, they will have to pay it back," says Christopher Fabian, VP of EG Tax.
Fabian has had trouble getting in touch with the IRS as his clients have had questions.
"How is that fair to the people who filed after March 17 who only got the proper subtraction? You know? They would almost have to change tax law again, and it's just mind-blowing," says Fabian.
2 On Your Side contacted the IRS on Monday.
A spokesperson told us that they would get back to us to verify if the information EG Tax was given is correct. We checked back in with them on Tuesday afternoon and they said they were still working to get us information. We did not hear back by our deadline on Tuesday, but EG Tax offers this tip in case the IRS does want its money back.
"We're advising our clients, don't spend the extra money," said Fabian.