One of the many tasks the IRS is busy with involves sending out a new kind of check to taxpayers. This stems from the $1.9 trillion stimulus law that passed in March. That’s in addition to other payments, such as a $1,400 stimulus check and the monthly child tax credit payments — the third of which will go out tomorrow, on September 15. Meanwhile, the issuance of IRS unemployment refund checks is ongoing, with an average of $1,600 being sent out to affected taxpayers.
Here’s what’s going on, who’s getting these checks, and why.
IRS unemployment refund coming soon
What we’re talking about here impacts only a subset of taxpayers who were on unemployment for at least a week in 2020. Specifically, any of those people on unemployment in 2020 who filed their federal taxes early this year — before the passage of the stimulus law in March — are likely affected by this news.
What the stimulus law did is exclude up to $10,200 in 2020 unemployment compensation from the calculation of taxable income. According to the tax agency, the exclusion applied to individuals and married couples. Specifically, those whose modified adjusted gross income was less than $150,000.
The IRS has spent the past several months, in the wake of the stimulus law, automatically re-calculating taxpayer filings. Where appropriate, it sends out an unemployment refund. The $1,600 average noted above means that some people get more. While, of course, some people get less — and others get nothing at all after the recalculation.
Additional facts to know
Through the end of July, there had been more than 8.7 million IRS unemployment refund payments sent out. Those totaled more than $10 billion, and the effort is ongoing.
“The IRS effort (is) focused on minimizing burden on taxpayers so that most people won’t have to take any additional action to receive the refund,” the agency said in a recent news release. “The IRS review means most taxpayers affected by this change will not have to file an amended return because IRS employees have reviewed and adjusted their tax returns for them. For taxpayers who overpaid, the IRS will either refund the overpayment or apply it to other outstanding taxes or other federal or state debts owed.”
Again, taxpayers don’t have to take any action on their part to receive one of the IRS unemployment refund payments. The IRS re-calculates everything on its end. And it sends out checks when appropriate.
The tax agency is completing all this, by the way, at the same time it’s busy with other important tasks. Such as preparing to send out more rounds of child tax credit payments. Check #3, for example, is set to go out on September 15. After that, there will be three more child tax credit distributions — on October 15, November 15, and December 15.
