This week was already chock-a-block with stimulus check-related news, before the IRS went ahead and decided to add something more on top of it all. The tax agency on Tuesday announced that nearly 4 million IRS tax refunds are being sent out this week — adjustments, we should add, that are partly related to the $1.9 trillion federal stimulus legislation from back in March.
What’s going on, exactly? Normally, when a person draws unemployment benefits, the IRS counts that as taxable income the following year. However, the stimulus legislation that funded a new round of stimulus checks also included a provision that excluded a portion of peoples’ unemployment income from last year for taxation purposes. Which was good news. Except for those people who’d already filed their federal tax returns early. Before March, to be more specific, which is when the legislation with this provision went into effect.
More IRS tax refunds coming
The IRS has since gone back and recalculated the affected returns, to take the stimulus law’s provision into account. This week’s announcement reflects the fact that the IRS has also started sending out refunds where appropriate.
A couple of important points about all this to know:
The IRS says that “taxpayers will generally receive letters from the IRS within 30 days of the adjustment, informing them of what kind of adjustment was made (such as refund, payment of IRS debt payment or payment offset for other authorized debts) and the amount of the adjustment.”
Also, the refunds can come in one of two formats. Either as a direct deposit into a bank account, or as a paper check. Direct deposit of these IRS tax refunds started on July 14. The refunds by paper check will begin July 16. Moreover, the tax agency says more such refunds are coming throughout the summer.
As we said, this is just one more reason that we’re in the midst of a big week for the IRS. Which, on Thursday, will also embark on a new round of stimulus check distributions (that you can read more about via our earlier coverage here).
As a quick recap, an estimated 36 million families are eligible to receive these new stimulus payments. How big of a payment each family gets will depend on the number and ages of children who live in their household. And there will be six checks in all, starting with this first one dated July 15.
The five subsequent checks will come once a month, through December, as either paper checks or direct deposits into bank accounts. Also, the IRS has set the 15th of each month as the payment date. With August being the one exception, since the 15th falls on a Sunday next month. Thus, next month’s check will come on Friday, August 13.