The Internal Revenue Service (IRS) is still working on its post-COVID-19 measures, and unemployment tax refunds are expected to come this month. With the current round of payments, the IRS is scheduled to disburse 1.5 million refunds, but what does this imply for each individual?
The IRS may owe you a refund if you filed your taxes earlier this year and paid on unemployment benefits received in 2020. The IRS has announced that the latest round of refunds will be sent out in August, with a total of over 1.5 million expected.
What to do to receive the unemployment tax refund?
Some people claim to have received their unemployment refunds by direct deposit while many are still waiting for their money to be refunded. The American Rescue Plan made the first $10,000 or 20,000 for married couples filing jointly non-taxable income.
Taxpayers who submitted their taxes before March 20, 2021, are now entitled to an adjustment and perhaps a refund. More than 8.7 million unemployment compensation refunds have been issued by the IRS, totaling more than $10 billion, as per MARCA.
The first round of refunds went to individuals who filed the simplest taxes, which are defined as single taxpayers with no dependents. Refunds began to be issued in May and will be distributed in batches throughout the summer. People are waiting for their money because more complex returns take longer for the department to process.
Take note that the agencies were able to distribute a large batch of 1.5 million refunds averaging $1,686 from 2020 unemployment benefits just a few weeks ago, and additional checks are expected to be sent out to Americans this month.
President Joe Biden's $1.9 trillion American Rescue Plan was able to waive federal tax on up to $10,200 in unemployment benefits, or $20,400 for married couples filing jointly, received by taxpayers last year, resulting in these refunds. According to the tax office, unemployment benefits are generally considered taxable income.
Per National Interest, most Americans will not be required to take any action to get their unemployment tax refunds. The IRS has verified that if people are qualified for a cash refund, their tax returns would be immediately adjusted.
Where's my IRS tax refund?
The IRS has been holding back millions of people's tax refunds for months. According to the Taxpayer Advocate Service, the IRS has a backlog of roughly 35 million unprocessed returns as a result of the pandemic's several difficulties.
On top of that, the IRS is swamped with stimulus payments, return adjustments, and the computation of various credits and tax advantages, including unemployment benefits for 2020. Many families rely on the money that has gone missing to help with bills, debt, and day-to-day expenditures.
The latest batch of stimulus checks, which included $15 billion in the second monthly payment of the increased child tax credit, provided some families with a margin; but an additional tax refund would be much more beneficial. One piece of good news is that the IRS has just released another round of refunds for unemployment benefits tax overpayments.
You can monitor your money using the Where's My Refund feature online, and you may verify the status of your unemployment refund by looking at your tax transcript. The IRS has reopened and is already processing mail, tax returns, payments, refunds, and correspondence, although delays are still occurring due to a lack of resources.
The IRS also stated that it is taking longer to analyze 2020 tax returns, such as assessing recovery rebate credit amounts for the first and second stimulus payments - or calculating earned income tax credit and extra child tax credit amounts. According to CNET, the following are some of the reasons why your tax refund may be delayed:
- It is incomplete.
- Your tax return has errors.
- Identity theft or fraud is suspected in your refund.
- You applied for the extra child tax credit or the earned income tax credit.
- Your return has to be reviewed again.
- Form 8379 (PDF), injured spouse allocation, is included in your return; this might take up to 14 weeks to process.
The IRS will provide you an explanation of the delay is due to a necessary tax adjustment made to a recovery rebate credit, earned income tax credit, or extra child tax credit claimed on your return. If a problem has to be resolved, the IRS will try to resolve it without informing you first. If the IRS needs any further information, it will send you a letter.