Unemployment refund update: IRS payment schedule, tax transcripts and more

Unemployment refund update: IRS payment schedule, tax transcripts and more

Are you still waiting on that refund from the IRS for taxes you overpaid on 2020 unemployment benefits? The tax agency issued its last batch totaling 1.5 million refunds in late July. Some are reporting on social media that they’ve received IRS updates on their tax transcripts with pending refund dates near the end of August. But many other taxpayers say they’re still in the dark and haven’t received a penny. Keep reading to learn how to access your tax transcript for clues about your refund status.

This is how it works: The first $10,200 of 2020 jobless benefits, or $20,400 for married couples filing jointly, was made nontaxable income by the American Rescue Plan. Taxpayers who filed their returns before the bill was passed in March would then become eligible for an adjustment and a possible refund, which the IRS is supposed to issue automatically sometime this summer. The average refund amount is $1,686, though it could be more or less, depending on income and other factors.

You should also look for an IRS TREAS 310 transaction code on your bank statement. It could mean your tax return was already reviewed and your refund deposited. Or if you’re a parent, it may be for your August child tax credit payment. For other unemployment news, check out the latest on $300 weekly bonus payments ending next month. And here’s how the child tax credit could affect your taxes in 2022. This story gets updates on a frequent basis.

10 things to know about IRS unemployment refunds

With the latest batch of payments, the IRS has now issued more than 8.7 million unemployment compensation refunds totaling over $10 billion. In late May, the IRS started sending refunds to taxpayers who received jobless benefits in 2020 and paid taxes on that money before the American Rescue Plan went into effect. That law waived taxes on up to $10,200 in unemployment insurance benefits for individuals earning less than $150,000 a year.

The first batch of these supplemental refunds went to those with the least complicated returns (single taxpayers with no dependents), and batches are supposed to continue throughout the summer for more complicated returns. On July 13, the IRS said it sent out 4 million more payments via direct deposit and paper check, and another 1.5 million went out starting July 28. According to an igotmyrefund.com forum and another discussion on Twitter, some taxpayers who filed as head of household or as married with dependents started receiving their IRS money in July or getting updates on their transcript with dates in August.

Here’s a quick recap of what we know:

  • The tax break is only for those who earned less than $150,000 in adjusted gross income and for unemployment insurance received during the pandemic in 2020.
  • The $10,200 is the amount of income exclusion for single filers, not the amount of the refund. The amount of the refund will vary per person depending on overall income, tax bracket and how much earnings came from unemployment benefits.
  • Most taxpayers don’t need to file an amended return to claim the exemption. But if you think you’re now eligible for deductions or credits based on an adjustment, check the recent IRS release for the list of who should file an amended return.
  • If the IRS determines you are owed a refund on the unemployment tax break, it will automatically correct your return and send a refund without any additional action from your end.
  • Not everyone will receive a refund. The IRS can seize the refund to cover a past-due debt, such as unpaid federal or state taxes and child support.
  • Refunds started going out in May and will go out in batches through the summer as the agency evaluates tax returns. More complicated returns could take longer to process.
  • The IRS is doing the recalculations in phases, starting with single filers who are eligible for the up-to-$10,200 tax break. It will then adjust returns for those taxpayers who are married and filing jointly, who are eligible for the up-to-$20,400 tax break.
  • Refunds will go out as a direct deposit if you provided bank account information on your 2020 tax return. A direct deposit amount will likely show up as “IRS TREAS 310 TAX REF.” Otherwise, the refund will be mailed as a paper check to whatever address the IRS has on hand.
  • The IRS will send you a notice explaining the corrections within 30 days of when a correction is made.
  • Some states, but not all, are adopting the unemployment exemption for 2020 state income tax returns.

How to check your tax transcript and refund status

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 method 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.

You can try the IRS online tracker applications, aka the Where’s My Refund tool and the Amended Return Status tool, but they may not provide information on the status of your unemployment tax refund.

An immediate way to see if the IRS processed your refund (and for how much) is by viewing your tax records online. You can also request a copy of your transcript by mail or through the IRS’ automated phone service by calling 1-800-908-9946…Read more>>

Source:-cnet 

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