The Balance is here to help you navigate your financial life. To that end, we track the money-related questions you most search on Google so we know what’s on your mind. Here are the answers to some of your most recent inquiries.
How do I know if I overpaid taxes on unemployment?
The IRS should have already checked on that for you, but if you’re not sure, you can always ask a tax professional. An unusual last-minute change to last year’s tax law meant that millions of people did overpay the taxes on their unemployment benefits, forcing the IRS to go back and recalculate their tax returns in recent months.
Of the estimated more than one in four American workers who collected jobless benefits due to the coronavirus pandemic—that’s according to a March analysis by the Century Foundation think tank—many were surprised to learn that such payments count as income in the eyes of the IRS. Not only that but, in most cases, taxes had not already been withheld from their unemployment checks, meaning that their refunds would be reduced or they would have to pay up at tax time.
Those rules changed, however, in March 2021—well into the 2020 tax season, after many had already filed their returns. The American Rescue Plan pandemic relief bill switched up the law so that people who collected unemployment in 2020 could exclude up to $10,200 of unemployment payments from their income on their taxes that year, so long as their total income was less than $150,000. (Married couples filing jointly could exclude up to $20,400 in jobless payments.)
The IRS said this spring and summer that it would automatically adjust the tax returns for people who hadn’t taken the $10,200 exclusion into account when filing, and would issue refunds in most cases, although some would be required to file amended tax returns. As of July 28, the last time the agency provided an update, more than $10 billion in refunds had been issued to over 8.7 million people.
If you haven’t gotten such a refund, and think you should, you can file an amended return, the IRS said.
As for 2021, the special $10,200 exemption for 2020 no longer applies, so the risk of having overpaid taxes on unemployment benefits is far less.
Why is Medicare going up?
You’re no doubt referring to Medicare’s Part B insurance. The standard monthly premium for Part B—which covers things like physician services—recently was increased for 2022 to $170.10, up by $21.60 from $148.50 this year. (Medicare has another part, called Part A, which includes hospital insurance and is free to most recipients.) The premium hike for Part B is the largest percentage-wise since 2016.
Why such a big increase? There are several reasons:
- Part of it is simply playing catch-up. Higher health care costs were expected to significantly raise the Part B premium for 2021. But after seniors groups lobbied lawmakers, Congress agreed to limit the 2021 premium increase because of the COVID-19 pandemic, while stipulating the Centers for Medicare & Medicaid Services (CMS) would have to make up for the reduced premium over time. That “payback” starts in 2022.
- There’s also the toll of generally rising costs to serve enrollees and higher health care expenses that were necessary to deal with the pandemic.
- In addition, CMS said it wants to build a cushion for unanticipated increases in health care spending, especially for certain drug costs. Specifically, it mentioned the potential for future Medicare coverage of clinician-administered Alzheimer’s drugs, which could require additional contingency reserves to cover the higher spending. The estimated cost for the Alzheimer’s drug Aduhelm, recently approved by the Food and Drug Administration, is $56,000 a year.