Unemployment tax refund update: 10 things to know about your IRS money



If you paid taxes on your 2020 unemployment benefits and filed your tax return early this year, you could be getting a bigger refund than you expected. Here’s why: The first $10,200 of 2020 jobless benefits, or $20,400 for married couples filing jointly, was made nontaxable income by the American Rescue Plan in March. The IRS has been making adjustments on tax returns and issuing refunds averaging $1,686 to those who are eligible for that tax break.

The frustrating thing is that the dates for the refunds are unclear. The last batch of payments, which went out to some 1.5 million taxpayers, was over a month ago. The IRS has not issued any news about a timeline, except to say “summer,” which officially ends Sept. 22. While some have reported on social media that they have pending refund dates on their IRS tax transcripts, many other taxpayers are fed up because they haven’t received any money or updates at all.

If you’re still wondering where your refund is, we’ll explain how to access your tax transcript online for clues. We’ll tell you why to look out for an IRS TREAS 310 transaction on your bank statement or an 846 code on your transcript. For other unemployment news, check out the latest on $300 weekly bonus payments ending this weekend. And here’s how the child tax credit could affect your taxes in 2022. This story has been updated.

Key things to know about 2020 unemployment tax refunds

In late May, the IRS started sending refunds to taxpayers who received jobless benefits in 2020 and paid taxes on that money before the provision in the American Rescue Plan waived taxes on up to $10,200 in unemployment insurance benefits for individuals earning less than $150,000 a year. With the latest batch of payments in July, the IRS has now issued more than 8.7 million unemployment compensation refunds totaling over $10 billion.

The first batch of these supplemental refunds went to those with the least complicated returns (single taxpayers with no dependents), and batches are supposed to continue throughout the summer for more complicated returns. On July 13, the IRS said it sent out 4 million more payments via direct deposit and paper check, and another 1.5 million went out starting July 28.

According to an igotmyrefund.com forum and another discussion on Twitter, some taxpayers who filed as head of household or as married with dependents started receiving their IRS money in July or getting updates on their transcript with dates in August and September.

Here’s a quick recap of what we know:

  • The tax break is only for those who earned less than $150,000 in adjusted gross income and for unemployment insurance received during the pandemic in 2020.
  • 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.
  • Most taxpayers don’t need to file an amended return to claim the exemption. But if you think you’re now eligible for deductions or credits based on an adjustment, check the recent IRS release for the list of who should file an amended return.
  • If the IRS determines you are owed a refund on the unemployment tax break, it will automatically correct your return and send a refund without any additional action from your end.
  • 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 phases, starting with single filers who are eligible for the up-to-$10,200 tax break. It will then adjust returns for those taxpayers who are married and filing jointly, who are eligible for the up-to-$20,400 tax break.
  • Refunds will go out as a direct deposit if you provided bank account information on your 2020 tax return. A direct deposit amount will likely show up as IRS TREAS 310 TAX REF. Otherwise, the refund will be mailed as a paper check to whatever 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.
  • Some states, but not all, are adopting the unemployment exemption for 2020 state income tax returns…Read more>>

Source:-cnet

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