What to know if you’re looking for that IRS unemployment tax refund

What to know if you’re looking for that IRS unemployment tax refund

Nearly 10 million Americans who got unemployment benefits in 2020 are due for a tax break refund. But when will that IRS money arrive?

It’s been two weeks since the IRS announced it would automatically start issuing refunds on 2020 jobless benefits. Unemployment benefits are generally treated as taxable income, but the American Rescue Plan in March waived federal tax on up to $10,200 of those benefits per person (or up to $20,400 for married couples filing jointly). Therefore, those who had filed their tax return before the new rules went into effect overpaid and are now due money back.

Millions of Americans are slated to receive the refunds, but when will they appear? What we know is that the IRS is still reviewing and processing tax returns and that the refunds were supposed to start in May and continue through the summer. The agency said that some adjustments will result in a refund, while others will get a reduced balance or no change at all.

We’ll continue to follow the details around the unemployment tax exemption. You may also want to know about the states opting out of $300 bonus unemployment payments and other jobless benefits programs as early as next month. If you’re a parent, here are details about the enhanced child tax credit, how much you could get for your family and how to use the upcoming IRS child tax credit portals. This story was recently updated with new information.

What to know about the unemployment tax refunds

The IRS claims it already started sending refunds to taxpayers who received jobless benefits last year. But those still waiting for checks have posted their frustration on Reddit and Twitter over the slow rollout and the lack of transparency from the agency.

Here’s what to expect:

  • The tax break is for those who earned less than $150,000 in adjusted gross income.
  • Refunds started going out the week of May 10, according to the IRS, and will run through the summer as the agency evaluates tax returns. More complicated returns could take longer to process.
  • The IRS is doing the recalculations in two phases, starting with single filers who are eligible for the up to $10,200 tax break. It will then adjust returns for those married-filing-jointly taxpayers who are eligible for the up to $20,400 tax break.
  • If the IRS determines you are owed a refund on the unemployment tax break, it will automatically send a check.
  • The IRS can seize the refund to cover a past-due debt, such as unpaid federal or state taxes and child support.
  • You don’t need to file an amended return to claim the exemption. (Here’s how to track your tax return status and refund online.) Some who used tax software such as TurboTax said they have seen their refund amount change due to the unemployment refund, although they have yet to see a check.
  • Refunds will go out as a direct deposit if you provided bank account information on your 2020 tax return. Otherwise, the refund will be mailed as a paper check to the address the IRS has on hand.
  • The IRS will send you a notice explaining the corrections within 30 days of when a correction is made.
  • You won’t be able to track the progress of your refund through the IRS Get My Payment tracker, the Where’s My Refund tool, the Amended Return Status tool or another IRS portal.

What we don’t know about unemployment tax refunds

The IRS has provided some information on its website about taxes and unemployment compensation. We are still unclear as to how to contact the IRS if there’s a problem with your tax break refund. (Here’s what we know about contacting the IRS for stimulus check problems.) We’ve reached out to the IRS for clarification.   ReadMore

Source : cnet

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