If You Received Unemployment Benefits The IRS May Owe You Money

If You Received Unemployment Benefits The IRS May Owe You Money

President Joe Biden’s American Rescue Plan passed in March provided up to $10,200 in unemployment compensation to be waived from taxation. But any taxpayer who paid their taxes prior to when the pandemic bill passed may be owed money from the IRS.

 

The IRS will continue to send tax refunds to nearly four million taxpayers this week who paid too much on their unemployment insurance in 2020.

“So far, the IRS has identified 13 million taxpayers that may be eligible for the adjustment,” the agency said in a statement last month. “Some will receive refunds, which will be issued periodically, and some will have the overpayment applied to taxes due or other debts. For some there will be no change.”

 

President Joe Biden’s American Rescue Plan passed in March provided up to $10,200 in unemployment compensation to be waived from taxation. But any taxpayer who paid their taxes prior to when the pandemic bill passed may be owed money from the IRS.

Those who are expecting refunds should see the money in their bank accounts as early as Wednesday by direct deposit, while the rest will be sent out by paper check. The agency reported that the average payment for a tax refund is $1,265, and most recipients will not have to complete any action to get the payment.

The IRS has sent some recipients their payments in May and June.

The agency has also been tasked with delivering the enhanced child tax credit from Biden’s rescue package.

Nearly 39 million families are expected to receive the credit, as the IRS prepares to distribute the first round of monthly payments on July 15.

Biden’s pandemic relief bill included a provision that granted parents within certain income thresholds an expanded child tax credit that will be sent out by the IRS on a monthly basis from July through December, while the rest of the credit can be claimed when they file their income tax returns next year.

The measure boosted the credit from $2,000 to $3,000 and allowed parents with children under the age of six to qualify for $3,600. The measure also permits parents of children at the age of 17 to be eligible for the credit.

Parents with children under the age of six will get $300 monthly payments per child starting July 15, and those with children between the ages of six and 17 will receive $250 payments per child.

To qualify for the full tax credit, individuals must earn less than $75,000, joint filers must make less than $150,000 and heads of households must earn less than $112,500. The amount will then drop by $50 for each $1,000 in income above these caps.

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.

Image: Reuters