GREENSBORO, N.C. — Tax Day was one month ago, but this week, the IRS made deposits or sent out checks to folks above and beyond their return. This credit from the IRS is for real. It's due to you paying too much tax on your unemployment benefits.
The American Rescue Plan allowed taxpayers to exclude up to $10,200 in unemployment benefits from the Adjusted Gross Income. Because of that, taxpayers didn't have to pay taxes on that income. Unfortunately, the legislation took effect after many filed returns and paid that tax which is why the IRS is now having to give refunds or credits.
The first phase of payments went out on June 7, 2021. These were taxpayers with the simplest returns; single taxpayers, no child credit, or refundable tax credits. This next phase includes couples filing as married jointly and other more complicated returns. The next round could include those who have more complicated returns, including earned income and child tax credits.
Just in case you missed it, the IRS estimates about 10 million taxpayers are due some kind of credit.
When will you get your refund?
The IRS said these corrections are being made automatically in a phased approach. The phases will continue through the end of the summer.
Who is eligible for an unemployment tax refund?
The American Rescue Plan forgave taxes on the first $10,200 of unemployment for individuals, including those who are married but file taxes separately. It forgives $20,400 for couples filing jointly.
The forgiveness is only for taxpayers who earned less than $150,000.
How will you get the refund?
The IRS will issue refunds through direct deposit if they have your banking info, otherwise, the refund will be mailed as a paper check to the address on record. The IRS also plans to send a letter explaining the corrections.