Theof 2021 treats the first $10,200 of unemployment benefits received last year (or $20,400 for married couples filing jointly) as nontaxable. What does that mean? Some 13 million taxpayers who paid income tax on that money before the change in the law could now be due for a sum back. The IRS has already issued more than 2.8 million federal refunds to individuals who collected unemployment insurance during the pandemic.
Late last month, the first round of refunds started going out to single people without dependents. The second round is expected sometime in mid-June. Married couples and taxpayers with dependents will see their IRS money later this summer. The actual amount of the refund will be different for each person. And if you owe taxes or other debts that money may be applied to those balances. We’ll tell you how you might check on your refund online.
As for other unemployment news, half of US states are opting out ofwhile many are offering . And if you’re a parent waiting for your first payment on July 15, calculate for your family and , including a new . We update this story regularly.
What to know about the unemployment tax break and refunds
The IRS already started sending refunds to taxpayers who received jobless benefits last year and paid taxes on the money. After some frustration with delays in the rollout, many single filers began seeing deposits in their checking accounts starting May 28, with 2.8 million refunds going out the first week of June. The IRS said the next set of refunds will go out in mid-June.
Here’s what to know:
- The tax break is for those who earned less than $150,000 in .
- The $10,200 is the amount of income exclusion for single filers, not the amount of the refund. The amount of the refund will vary per person depending on overall income, tax bracket and how much earnings came from unemployment benefits.
- Not everyone will receive a refund. The IRS can seize the refund to cover a past-due debt, such as unpaid federal or state taxes and child support.
- Refunds started going out in May and will go out in batches 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.
- You don’t need to . (Here’s how to .) 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…Read more>>