The Internal Revenue Service and U.S. Department of the Treasury should explore whether it's possible to automatically adjust the taxable income of people eligible for this unemployment income exclusion, the senators and representatives said in the letter. They included Sen. Bernie Sanders, I-Vt., and Democrats in both chambers, such as Sen. Ron Wyden, D-Ore., the chairman of the Senate Finance Committee, and Rep. Cindy Axne, D-Iowa.
If these automatic adjustments aren't possible, the agencies should conduct a public awareness campaign to make sure people get the tax relief they're entitled to, according to the letter.
The American Rescue Plan, signed by President Joe Biden on Thursday, excludes up to $10,200 in unemployment benefits received in 2020 from taxable income. But the legislation came weeks into the 2021 tax filing season, so people who received nontaxable unemployment income last year may have already filed their returns.
Not only will some people owe less tax because of this exclusion, but they also might be newly eligible for the earned income tax credit or child tax credit, making a public awareness campaign especially important, according to the letter.
Some lawmakers have argued that the agencies should extend the April tax deadline, saying that taxpayers might need more time to account for this unemployment exclusion and other provisions in the American Rescue Plan. IRS Commissioner Chuck Rettig said March 3 that the agency was sticking to the April 15 deadline.
--Additional reporting by David van den Berg and Joshua Rosenberg. Editing by Neil Cohen.
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