Unemployment refund delayed? Here’s what to know about your IRS tax money

The IRS is recalculating taxes on unemployment compensation and sending letters with the quantity.

Angela Lang/CNET

Millions are nonetheless ready for tax refunds for jobless advantages, however the IRS is experiencing a backlog that is inflicting delays in getting money to these individuals. The refunds are coming as a tax break for 2020 unemployment compensation underneath the American Rescue Plan, which excluded the first $10,200 of 2020 unemployment benefits — or the primary $20,400 for married {couples} submitting collectively — from being taxed as revenue. 

The IRS has to compensate for adjusting returns for the hundreds of thousands of Americans who filed taxes and paid on unemployment advantages earlier than the legislation was handed. On June 4, the IRS stated it had despatched out greater than 2.8 million refunds and introduced a second “mid-June” batch. Weeks later, many taxpayers have not obtained their money and calls to the IRS are going unanswered. There’s loads of shared angst on dialogue platforms reminiscent of Reddit and Twitter

We’ll proceed to monitor the scenario for you. Below, we’ll present you ways to test your IRS account on-line to get some clues about your refund standing. As for different unemployment information, here is what to know about states ending the $300 weekly bonus payments and that are providing return-to-work bonuses. And should you’re a father or mother anticipating your first child tax credit cost on July 15, we are able to inform you how these payments could affect your taxes subsequent 12 months. We replace this story recurrently. 

9 particulars to know about IRS tax refunds on unemployment advantages

The IRS began sending refunds to taxpayers who obtained jobless advantages final 12 months and paid taxes on the money early in submitting season. After some delays within the rollout, many single filers started seeing deposits of their checking accounts beginning May 28, with 2.8 million refunds going out the primary week of June. 

The IRS stated the subsequent set of refunds for single filers will exit in “mid-June,” however these funds haven’t but been formally confirmed. More advanced returns (like these with dependents) have been supposed to take longer. The IRS has not issued a brand new timeline for unemployment compensation and has lately been targeted on the rollout for the newly expanded little one tax credit score, which begins this month. 

Here’s what to know:

  • The tax break is for many who earned lower than $150,000 in adjusted gross income
  • The $10,200 is the quantity of revenue exclusion for single filers, not the quantity of the refund. The quantity of the refund will fluctuate per particular person relying on total revenue, tax bracket and the way a lot earnings got here from unemployment advantages.
  • Not everybody will obtain a refund. The IRS can seize the refund to cowl a past-due debt, reminiscent of unpaid federal or state taxes and little one assist. 
  • Refunds started going out in May and can exit in batches by way of the summer time because the company evaluates tax returns. More sophisticated returns may take longer to course of.
  • The IRS is doing the recalculations in two phases, beginning with single filers who’re eligible for the up-to-$10,200 tax break. It will then alter returns for these married-filing-jointly taxpayers who’re eligible for the up-to-$20,400 tax break.
  • If the IRS determines you might be owed a refund on the unemployment tax break, it can robotically right your return and ship a test or deposit the cost in your checking account.
  • Refunds will exit as a direct deposit should you offered checking account data on your 2020 tax return. Otherwise, the refund will likely be mailed as a paper test to the tackle the IRS has readily available.
  • You don’t need to file an amended return to declare the exemption. (Here’s how to track your tax return status and refund online.) Some who used tax software program reminiscent of TurboTax stated they’ve seen their refund quantity change due to the unemployment refund, though they’ve but to see a test. 
  • The IRS will ship you a discover explaining the corrections inside 30 days of when a correction is made.

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How to check your IRS unemployment refund status online

The IRS says eligible individuals should’ve received Form 1099-G from their state unemployment agency showing in Box 1 the total unemployment compensation paid in 2020 (if you didn’t you should request one online). Some states may issue separate forms depending on the jobless benefits — for example, if you received federal pandemic unemployment assistance, or PUA. 

One way to know if a refund has been issued is to wait for the letter that the IRS is sending taxpayers whose returns are corrected. Those letters, issued within 30 days of the adjustment, will tell you if it resulted in a refund or if it was used to offset debt. The IRS says not to call the agency. 

The IRS online tracker applications, aka the Where’s My Refund tool and the Amended Return Status tool, will not likely provide information on the status of your unemployment tax refund. The only way to see if the IRS processed your refund online (and for how much) is by viewing your tax records. 

Here’s how to check online:

1. Visit IRS.gov and log in to your account. If you haven’t opened an account with the IRS, this will take some time as you’ll have to take multiple steps to confirm your identity.

2. Once logged into your account, you’ll see the Account Home page. Click View Tax Records.

3. On the next page, click the Get Transcript button.

4. Here you’ll see a drop-down menu asking the reason you need a transcript. Select Federal Tax and leave the Customer File Number field empty. Click the Go button.

5. The following page will show your Return Transcript, Records of Account Transcript, Account Transcript and Wage & Income Transcript for the last four years. You’ll want the 2020 Account Transcript

6. This will open a PDF of your transcript: Focus on the Transactions section. What you’re looking for is an entry listed as Refund issued, and it should have a date in late May or June. 

If you don’t have that, it likely means the IRS hasn’t gotten to your return yet. 

What we still don’t know about the IRS unemployment tax refund

The IRS has only provided limited information on its website about taxes and unemployment compensation. We’re still unclear of the exact timeline for payments or how to contact the IRS if there’s a problem with your tax break refund. 

Here’s what we do know about contacting the IRS for stimulus check problems. For more on stimulus payments and relief aid, here is information about the child tax credit for up to $3,600 per child and details on who qualifies.

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