The Internal Revenue Service said Friday that wrongfully incarcerated taxpayers will have some additional time to take advantage of a tax break that Congress recently approved.

They can claim the retroactive exclusion from income for any civil damages, restitution or other monetary award received in connection with their incarcerations. Under the Bipartisan Budget Act of 2018, which includes dozens of tax extenders that had originally expired in 2016, a wrongfully incarcerated individual now has until Dec. 17, 2018, to file a related refund claim.

Under the exclusion, people who have been wrongfully sentenced to prison do not include in income any civil damages, restitution or other monetary award received that related to their incarceration for the covered offense for which they were convicted. The IRS has posted a set of answers to questions detailing who qualifies for the exclusion, the documentation and recordkeeping requirements, and monetary awards that qualify for the tax break.

To file a refund claim, eligible taxpayers need to file Form 1040X for each year they included a wrongful incarceration award in their income and write “Incarceration Exclusion PATH Act” at the top of each Form 1040X.

The IRS has set up a special mailing address for amended returns claiming the wrongful incarceration exclusion. The Forms 1040X should be sent, along with any supplemental documentation, to:

Internal Revenue Service

333 W. Pershing

Stop 6503 5th Floor

Kansas City, MO 64108

The IRS may need up to 16 weeks for processing. Taxpayers can then use the “Where’s My Amended Return?” app on IRS.gov to see the status of their tax refund claims.

An American flag flies outside the Internal Revenue Service headquarters at sunrise in Washington, D.C.
An American flag flies outside the Internal Revenue Service headquarters at sunrise in Washington, D.C. Andrew Harrer/Bloomberg

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