Viral Fb publish: The IRS is taking cash away from individuals who acquired unemployment advantages.

PolitiFact’s ruling: Principally False

This is why: Does receiving unemployment advantages imply the IRS may take away your tax refund?

A publish on Fb means that.

The publish accommodates a screenshot from the IRS’s app, IRS2Go, informing the person that “Your refund quantity has been diminished by $13,424.40 to pay a overdue obligation corresponding to youngster help, one other federal company debt, or state revenue tax.”

The Fb person wrote: “The IRS IS NOT PLAYING ABOUT THAT UNEMPLOYMENT YALL TOOK I WISH y’all LUCK.”

This publish was flagged as a part of Fb’s efforts to fight false information and misinformation on its Information Feed.

We requested some tax consultants whether or not receiving unemployment advantages may result in a diminished tax refund. They instructed us that if the unemployment advantages have been correctly claimed, a taxpayer wouldn’t must pay them again, however could be responsible for revenue taxes on the quantity they acquired.

Any tax refund might be diminished as a result of a filer owes a debt to the federal or state authorities or has unpaid youngster help, mentioned Erica York, an economist with the Tax Basis, a nonprofit group that analyzes tax coverage.

A refund happens when a taxpayer has overpaid their taxes in the course of the 12 months or is eligible to obtain refundable tax credit that exceed the quantity of their tax legal responsibility, York mentioned. Via the Treasury Offset Program, the Bureau of Fiscal Service can scale back a tax refund to get better delinquent federal nontax debt, unpaid youngster help, or state debt, whether or not from taxes or one other obligation. A state debt may embrace fraudulently claimed unemployment compensation, which must be repaid.

In 2020, some states gave more cash to unemployment recipients than they have been eligible for, and demanded that the cash be paid again, even when the recipients weren’t answerable for the error or knew they have been being overpaid, in line with the New York Instances.

If the unemployment advantages have been correctly claimed, a taxpayer wouldn’t must pay them again, however could be responsible for revenue taxes on the quantity they acquired, she mentioned. Unemployment recipients can select to have federal revenue tax withheld, at a charge of 10%, or they will make quarterly estimated funds.

If somebody correctly claimed unemployment advantages, and overpaid the taxes on them, the ensuing refund may very well be diminished to fulfill unpaid authorities debt or unpaid youngster help, she mentioned.

Janet Holtzblatt, a senior fellow on the City-Brookings Tax Coverage Middle, described the IRS because the “center man,” and mentioned that the Treasury Division’s Treasury Offset Program collects debt by means of diminished tax refunds.

The IRS stopped gathering revenue taxes on most unemployment advantages collected in 2020, however began gathering them once more within the 2021 tax 12 months.

Each tax state of affairs is completely different, and refunds rely upon every particular person’s taxes paid, eligibility for tax credit and deductions, and an individual’s specific excellent money owed to the federal government or unpaid youngster help. There isn’t a common tax penalty for receiving unemployment advantages.

Our ruling

A Fb publish recommended {that a} tax refund may very well be diminished as a result of somebody acquired unemployment advantages.

It seems that within the case of this Fb publish, primarily based on the screenshot from the IRS app and the poster’s personal phrases, somebody who acquired unemployment advantages then had their revenue tax refund diminished due to an unpaid debt.

However the authorities doesn’t require unemployment advantages which have been correctly claimed to be paid again, and it doesn’t scale back the quantity of a tax filer’s refund if that filer doesn’t have unpaid authorities money owed or youngster help.

We charge this declare Principally False.

Sources

  • Fb publish, Feb. 20, 2022.

  • CNBC, “Unemployment tax refunds could also be seized for unpaid debt and taxes,” Might 18, 2021. Accessed Feb. 22, 2022.

  • CNBC, “Tax season is right here. Don’t anticipate a refund for unemployment advantages,” Jan. 24, 2022. Accessed March 2, 2022.

  • IRS.gov, reality sheet, “IRS: Expanded credit for households spotlight tax modifications for 2021; many individuals who don’t usually file ought to file this 12 months,” February 2022. Accessed Feb. 22, 2022.

  • IRS.gov, Tax Subjects, “Matter No. 203 Decreased Refund,” Jan. 24, 2022. Accessed Feb. 22, 2022.

  • E mail interview, Janet Holtzblatt, senior fellow, City-Brookings Tax Coverage Middle, Feb. 22, 2022.

  • E mail interview, Erica York, economist, Tax Basis, Feb. 22, 2022.

  • E mail, cellphone interviews, IRS spokesperson, Feb. 24, 2022.

  • Telephone interview, John Rizzo, senior spokesperson, public affairs, U.S. Division of Treasury, March 2, 2022.

  • U.S. Division of the Treasury, Bureau of the Fiscal Service, fact-sheet, “Treasury Offset Program, Abstract of Program Guidelines and Necessities.” Accessed March 2, 2022.

  • The New York Instances, “Jobless Advantages Saved Them, Till States Wished the Cash Again,” Dec. 11, 2020. Accessed March 3, 2022.

This text initially appeared on Austin American-Statesman: Deceptive publish hyperlinks unemployment advantages, diminished tax refunds

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