The IRS this week is sending 2.8 million refunds to those who received unemployment benefit money in 2020 and then paid taxes on the money this year. The $10,200 unemployment tax break (or up to $20,400 for married couples filing jointly) is part of the American Rescue Plan passed in March that also authorized the third stimulus checks and more money for the child tax credit. The IRS said it has identified 13 million taxpayers so far who paid taxes and may be eligible for an adjustment.
The unemployment tax refunds will be sent in waves, with the first to receive them being single filers. Joint filers and others whose tax returns were a bit more complicated will get them in the coming weeks and months. The IRS said it’s calculating the refunds and is handling the simpler returns first — so far it has evaluated more than 3.1 million returns. The refund announcement followed Thursday’s news that first-time unemployment claims dropped for the week ending May 29 to 385,000, from 406,000 for the week before.
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 return-to-work bonuses some states are offering. 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 break and refunds
The IRS has started sending refunds to taxpayers who received jobless benefits last year and paid taxes on the money. More single filers began seeing deposits in their checking accounts from 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…Read more>>